Growing number of small businesses in dispute over unpaid money: VSBC Annual Report 2023-24
Victorian Small Business Commission
Almost half (41%) of dispute resolution applications to the Victorian Small Business Commission (VSBC) under the Small Business Commission Act were related to unpaid money, according to its Annual Report 2023-24, tabled in parliament today.
The VSBC is an independent statutory authority tasked with preventing and resolving disputes faced by small businesses, retail tenants and their landlords.
Victorian Small Business Commissioner Lynda McAlary-Smith said this was a reminder for big businesses to pay small enterprises on time.
“Small businesses are impacted by late payments in a big way and they’re often in a power imbalance with larger clients, which is when we assist.”
“Cashflow is a major concern for small business owners. Many business owners are waiting on outstanding payments for their goods and services…and in turn are stressed about paying their own bills. They don’t go into business to provide a free credit line to others.”
7,357 Victorian small businesses contacted the VSBC for information and 1,795 applications were made for assistance with disputes during financial year 2023-24.
35% of disputes were resolved through early dispute resolution and 75% of those that progressed to a formal mediation were successfully resolved. Mediation clients were pleased with the service, on average rating it 8.5/10.
Retail, accommodation and food service small businesses represented 42% of applicants for assistance.
“Small businesses are continuing to feel the economic repercussions of the COVID-19 pandemic, with COVID-related debts and deferred arrangements surfacing as disputes today.” Commissioner McAlary-Smith said.
The VSBC received 929 applications to resolve retail leasing disputes between tenants and landlords.
Contributing issues included disagreements on repairs and maintenance, early lease termination and make good obligations, with the majority of disputes related to money owed by the tenant, but that was never in isolation.
“We encourage retail tenants and landlords to raise concerns with each other as soon as they occur for the best possible chance of achieving a positive solution before it becomes a larger dispute.” McAlary-Smith said.
The Victorian Small Business Commission can be reached on 1800 878 964 or vsbc.vic.gov.au
Contact details:
Nick Edrington, 0459 542 115, nick.edrington@vsbc.vic.gov.au