Clark pushes 30-day pay case to cash flow reform

Payment Times Reporting Framework legislation opens for consultation

Clark pushes 30-day pay case to cash flow reform
Warren Clark


Legislation seeking to increase supply chain payment transparency is a good start but will only have a lasting impact if it enforces 30-day limits, National Road Transport Association (NatRoad) CEO Warren Clark says.

The Payment Times Reporting Framework legislation, which is now open for industry consultation, would require Australian businesses with an annual turnover of $100 million or more to report how quickly they say they pay and when they actually pay their small business suppliers.

It will cover approximately 2,500 of Australia’s large businesses, including foreign companies and government entities.

"Slow or deliberately delayed payment times have a significant impact on small business cash flow and viability," federal employment minister Michaelia Cash says in a statement announcing the legislation.

"This will be a landmark reform which will encourage fairer and faster payment times for small businesses.

"Big businesses pay their small business suppliers late more than 50 per cent of the time. There is simply no excuse for that.

"The government has already changed its payment system, to make sure small businesses receive payment for government contracts under $1 million within 20 days."

While "pleased" at the federal commitment to payment times legislation, Clark doubles down on earlier calls to enshrine mandatory 30-day payment times in law to protect trucking owner-operators and small businesses.

Read Clark's earlier calls for 30-day payment terms, here

"The federal government should make 30-day payments a minimum payment period rather than a hope and a prayer for small business," he says.

"This is a good first step but payments beyond 30 days should be made illegal.

"We want to end the uncertainty and inconsistency of payment times for transport owner-operators as delayed payment or non-payment are the major contributors to business closure."

"The well documented inconsistencies and blatant infringements of agreed payment terms by customers in the road transport industry mean that a new law making 30 days the longest payment period permitted at law would have real cut through to help small businesses."

Clark sees the current times culture as a "cheap form of finance" higher up the supply chain that crimps smaller businesses and operators.

"Remember that subcontracting plays a vital role within the hire and reward fleet. Many of these subcontractors are owner-operators with no employees.

"Less than 0.5 per cent of all operators own a fleet of more than 100 trucks, and 70 per cent have just one truck in their fleet.

"Unreasonable payment times by suppliers means these small businesses are being used as a cheap form of finance.

"The effect of extended payment times affects all levels of industry, putting more cost and reliance on credit just to stay in business.

"As a result, more businesses are finding it too challenging to continue in a market that is already cost competitive, fuelled by increased toll and land side port charges and a foreshadowed increase in road user and heavy vehicle registration charges from 1 July this year."

NatRoad continues to lobby the federal government for changes to the law to better support and protect road transport operators, Warren notes.

Meanwhile, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell encourages small businesses to have their say on the proposed reform.

"Cash flow is king for small businesses and we welcome the federal government’s continued efforts to ensure they are paid on time," Carnell says.

"This framework will require big businesses to be upfront and honest about the time it takes to pay small businesses, to help small businesses choose who they supply.

"Small businesses can now provide their feedback on this proposed reform which is designed to drive cultural change in business payment performance across the economy."

Operators can make a submission until March 6, here


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