ATA in warning about extended payment terms

Photography by: Brad Gardner


Operators advised of growing concerns about a trend toward longer payment terms

ATA in warning about extended payment terms
On the agenda: Chris Melham says the ATA will next week discuss payment terms in the trucking industry.

 

Australia’s peak trucking lobby will next week turn its attention to the hot-button topic of lengthy payment terms.

The time businesses are taking to pay trucking operators for work completed has been a recurring complaint in 2015, with claims of 90 to 120-day terms being imposed.

The Australian Trucking Association (ATA) earlier this year pledged to look into the issue, and CEO Chris Melham says a meeting on it will be held next week.

"At its meeting next week, the ATA Council will consider a plan for the ATA to increase its focus on business-to-business issues in response to growing concerns about the trend towards longer payment times, as well as other problematic terms in trucking industry contracts," Melham says.

His comments come following repots that BHP Billiton and other companies are planning to push out their payment terms from 30 to 60 days.

Melham says these firms need to recognise the consequences their decisions can have on trucking operators. He has also urged operators to be wary about accepting longer terms.

"Trucking operators must assess whether they will have sufficient cash flow to support extended payment terms, not just in the first year but in every year of the contract," Melham says.

"Operators that agree to extended payment terms still need to pay their own creditors on their existing cycles – for example, this could include 21-day payments to fuel suppliers, 30-day payments to small owner-driver subcontractors, and weekly or fortnightly payroll payments.

"Rather than just signing a new contract with extended payment terms, the ATA urges all affected operators to examine their contracts and seek professional advice."

In May this year FBT Transwest managing director Cameron Dunn claimed payment terms of 120 days were becoming common, while federal senator Glenn Sterle said he received reports of 90-day terms happening.

Members of NatRoad passed a motion at their annual gathering for the group to address payment terms.

Meanwhile, Sterle and fellow senator John Williams have threatened to take action against businesses pushing out payment terms.

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