Push to legislate 30-day payment terms

Payment of Invoices

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NatRoad welcomes the imminent changes to the Owner Drivers and Forestry Contractors legislation which directly impacts on invoicing payment terms for owner drivers.

The Victorian legislative change is effective from 1 May 2020. It requires payment of invoices within 30 days of receiving an invoice from contractors where the contractor is an owner driver.

“Cashflow is the single biggest reason for small businesses going under and many large businesses are paying invoices well beyond 30 days. Unfortunately many are using COVID-19 as an excuse to push payment times out even further,’ NatRoad CEO Warren Clark said.

It is hoped that the changes in Victoria can help reduce the uncertainty and inconsistency of payment times for small transport owner-operators but more needs to be done and changes introduced nationally.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has recommended that the federal government should adopt a maximum 30-day payment regime.

“While the federal Government has passed its Payment Times Reporting legislation into Parliament it is unlikely to result in the systemic change because it is not binding,’ said Warren.

The current Business Council of Australia voluntary supplier payment code that compels signatories to pay smaller suppliers within 30 days has proven to be ineffective, noting that it has no compliance or audit processes.

The federal adoption of 30 day payment terms is a critical issue for NatRoad as members struggle through the effects of COVID-19.

NatRoad has been asking the federal Government to address this issue for a considerable period.  The best means of assisting industry and all owner-drivers would be for the federal Government to introduce a mandated Code for the industry under Part IVB of the Competition and Consumer Act, 2010 (Cth).

The Code would regulate payment times, permitting a maximum of 30 days from date of invoice, as well as containing a prohibition on set-offs and pay-when-paid arrangements.  These are major and long-standing issues affecting the road transport industry that should be fixed now.