The Australian Small Business and Family Enterprise Ombudsman has raised the prospect of regulation of the supply chain finance market unless large businesses and financiers clean up their act.The ASBFEO has released a position paper with preliminary findings from its review of supply chain finance. It highlights a number of problems with the invoicing practice.The ombudsman says late payments by large businesses to small businesses account for 53 per cent of invoices. Late payments and long payment terms are the biggest risk to cash flow for small business.It says supply chain finance, which allows a large business to offer suppliers early payment of an invoice at a discount, is a legitimate and effective tool to free up cash flow for small business.  In arrangements where third parties are involved, the supplier is paid by a finance company and the buyer reimburses the finance provider at the end of the standard payment term. The report says the ombudsman "has always held the view that where large businesses offer reasonable payment terms (30 days or less) to their small business suppliers and pay on time, offering optional SCF products can provide significant benefits to their suppliers".However, its review has found that many big businesses have extended payment terms and then offered SCF. The supplier is paid within the original payment terms but at a discount.The review says may large businesses develop supply chain finance solutions for the purpose of extending payment terms."This practice severely impacts small business suppliers and is clearly unacceptable. There is increasing abuse of SCF," the review says.The review has found there is a lack of contractual transparency in many of these arrangements.It also found that there was widespread manipulation of the definition of small business to allow big companies to extend payment terms.The ASBFEO has called for consistent small business definition, enforceable payment times under the Business Council's Supplier Payment Code.It has asked for responses to questions, such as whether the Supplier Payments Code should be mandatory and whether there should be an economy-wide 30 day payment standard.