Recommends new rule modelled on construction industry’s security of payment system
Australian Trucking Association (ATA) chair Noelene Watson says the small business ombudsman must recommend the development of a mandatory industry code that bars the practice of delayed payments in trucking.
Watson says small operators are vulnerable to “adverse changes” in their payment terms, particularly when larger customers extend processing time for invoices.
In order to avoid this, ATA recommends either a mandatory 30-day payment rule or a “standalone legislation” based on the Building and Construction Industry Security of Payment Act (SOP).
The suggestion is part of ATA’s submission to the Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO’s) inquiry into payment times and commercial practices.
“The trucking industry consists almost entirely of small businesses and is characterised by tight margins,” Watson says.
“The vast majority of the costs incurred by small trucking businesses must be met before they can bill their customers.
“This includes wages or personal living costs, fuel, tyres, finance costs, registration and maintenance.
“A mandatory code for either the trucking industry or all small businesses under Part IV-B of the Competition and Consumer Act should be designed to cover payment times, which should be no more than 30 days from the date an invoice is issued.
“The code would also need to include a prohibition on set offs and pay when paid arrangements, alternative dispute resolution, and special rules for recipient created tax invoices to prevent customers from delaying the creation of these invoices to avoid triggering the 30 day period.”
Alternatively, Watson says, authorities must explore the possibility of having a security of payment system in place within the trucking sector.
The current SOP rule for building and construction ensures a fast and effective process to recover payments, without legal assistance.
ATA says the ASBFEO inquiry “needs to result in solutions to extended payment times.
“Small trucking businesses should not have to provide extended credit to larger customers, risking their viability and jobs in the industry.”
ASBFEO Kate Carnell had earlier expressed support for a compulsory code option for payment terms to encourage better cash flow.
This was one of the suggestions included in the Ombudsman’s report on the effects of the Road Safety Remuneration Tribunal (RSRT) and its associated payment order on small businesses.