BCA’s voluntary 30-day payment code raises concerns

By: Anjali Behl


Ombudsman calls for national pay transparency register, NatRoad pushes for mandatory 30-day pay rule

BCA’s voluntary 30-day payment code raises concerns
Carnell warns that her office will call for government intervention in case big businesses do not sign up or comply with the Code.

 

Over 30 companies have signed a voluntary code of conduct that aims to encourage businesses to pay their suppliers on time.

Although the initiative has received a nod of approval from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and the National Road Transport Association (NatRoad), both parties are sceptical any significant changes will result from the move.

While ASBFEO Kate Carnell welcomes the news, she expresses doubt that the Business Council of Australia (BCA’s) Australian Supplier Payment Code will be able to tackle the issue of unreasonable payment times.

Carnell is calling for a ‘national payment transparency register’ to independently monitor payment terms and practices.

The register will provide an independent space where companies can be held responsible for unreasonable payment times.

NatRoad, on the other hand, says that while the purpose of the code is welcome, it is unlikely to solve the problem of delayed payment times.

It is calling for the government to mandate a 30-day payment rule.

The voluntary code comes in response to an inquiry conducted by the Ombudsman’s office on pay time practices that revealed "poor business behaviour" by larger players in dealing with small suppliers.

The ASBFEO raises four main concerns with the Code:

• "it provides three options for signatories to commit to, which may lead to payment times over 30 days

• it is self-enforcing with no independent compliance mechanism

• there is no standard reporting in place to monitor payment practices

• signatories have 18 months from signing up to achieve full compliance, but faster payment times need to be implemented much sooner".

Carnell says her office will monitor the signatories every three months to ensure compliance.

She warns that if the majority of large Australian businesses do not sign up or comply with the Code, her office will push for government intervention.

"None of us want more red tape, but if the signatories don’t keep to this Code, there’s no other option but to introduce legislation to regulate it," Carnell says.

"Multinational companies need to look to the experiment in the EU and UK where they went down the path of a voluntary code.

"It failed and the government had to step in to regulate it."

NatRoad CEO Warren Clark also believes the voluntary code alone cannot stop the "ill treatment" of small businesses.

"Around 70 per cent of all operators have one truck in their fleet and approximately 24 per cent have two to four trucks," Clark says.

"Less than 0.5 per cent of all operators have fleets with 100 plus trucks.

"Whilst members will welcome the introduction of a voluntary code by big business, cash flow is king and small businesses should not be treated as temporary bankers for big business.

"The voluntary code won’t stop the ill treatment of small businesses in the transport industry."

"Our members have told us that lengthy payment terms increase financial and administration costs, reduce potential for growth and investment, and ultimately add to business uncertainty and failure.

Clark cites ASBFEO’s inquiry findings that suggest the industry is extremely vulnerable to extended pay time exploitation.

NatRoad has asked the federal government to "introduce a mandated code covering payment terms for small trucking businesses to include payment times, a prohibition on set offs and pay when paid arrangements similar to the security of payments legislation that operates in the building and construction industry.

"Alternatively, legislation mandating 30 day payment should be introduced."

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