NSW subcontractor policy sparks NatRoad payment terms call


Association tells big business to stop using owner-operators as ‘cheap finance’

NSW subcontractor policy sparks NatRoad payment terms call
Many companies are using Covid-19 as an excuse to push payment times out further than 30 days: NatRoad

 

The National Road Transport Association (NatRoad) has used a recent NSW Small Business Commissioner (SBC) ruling to call for sweeping payment terms reform.

The SBC released the Small Business Shorter Payment Terms Policy, which requires companies entering into contracts with the NSW government to pay their subcontractors within 20 business days following the receipt of invoice.

This applies to contracts from July 1, 2021 with a value of $7.5 million or more.

Under the policy, a NSW government agency must require the large business to:

  • Identify direct subcontractors, which are engaged to provide goods or services to the large business for the purposes of the relevant goods or services head contract between the large business and the NSW government, and inform them of this policy.
  • Include in its subcontracts with small business subcontractors, which are (wholly or in part) for the provision of goods or services for the purposes of the relevant NSW government head contract, a requirement that the large business make payments under the subcontracts within 20 business days following the receipt of a correctly rendered invoice from the small business subcontractor.
  • Pay small business subcontractors for the provision of goods or services relevant to the NSW government agency head contract within 20 business days following receipt of a correctly rendered invoice.
  • Report under the head contract as per the contractual requirements relating to this policy.

In a pointed communique titled Improve Payment Terms and Stop Using Owner-Operators as ‘Cheap Finance’, NatRoad said that, although this is a welcome change, it only applies to a small number of owner-operators, with large numbers of operators struggling to pay their own bills.

"Delayed payments or non-payments are the major contributors to business closure," the association added.

"Large companies are effectively using sub-contractors as a way to finance their operations by not paying them on time."


Trucking and the Covid-driven payment pandemic


NatRoad continues to lobby the federal government to make 30-day payments a maximum time within which payment to a small business must be made.

"A national law to that effect would help end the uncertainty and inconsistency of payment times for transport small businesses," it said

Many companies are using Covid-19 as an excuse to push payment times out further than 30 days, the association charged. 

"In the face of this trend, it is hoped that the changes in NSW point to a trend that can help reduce the uncertainty and inconsistency of payment times for small transport owner-operators.

"But more needs to be done and similar changes should be introduced nationally and made law rather than form part of a government code.  

"Better support and protection are needed for road transport operators to keep them on the road during these turbulent times."

 

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