Extended payment times are a growing problem for small trucking businesses and must be fixed, chairman of the Australian Trucking Association Geoff Crouch said.
Mr Crouch made the comments following the release of the Australian Small Business and Family Enterprise Ombudsman’s Final Report into Payment Times and Practices. The ATA made a detailed submission to its inquiry.
“The ATA has been calling for extended payment times to be fixed and now the small business ombudsman has backed the need for the Government to act. In the trucking industry, some big business customers are demanding payment terms of up to 120 days,” Mr Crouch said.
“The report recommends that industry codes should include best payment practices, including set payment times. In the 2016 election campaign, the ATA called for a mandatory code covering payment terms for small trucking businesses and related issues.”
Mr Crouch said the ATA supported the ombudsman’s other recommendations to the Government, which would deliver shorter and more certain payment times and practices.
“The Government has made valuable reforms for small business – such as the introduction of the small business ombudsman and lower company taxes, but its small business agenda must also include fixing extended payment times,” he said.
“The Government must act, and introduce shorter payment times for its own procurement, require businesses who sign government contracts to pay their suppliers in line with these shorter payment times, and legislate maximum payment times for business to business transactions.”
The inquiry into payment times and practices was the first self-initiated inquiry conducted by the ombudsman, illustrating the importance of the ombudsman and its ability to start its own inquiries on issues impacting small businesses.
“The ability of the small business ombudsman to self-initiate an inquiry is critical to giving small business a louder voice,” Mr Crouch said.
“The ATA’s submission to the review of the ombudsman endorsed its ability to self-initiate inquiries and supports its approach to consulting with small business.”
“It is also important that recipient-created tax invoices (RCTI) are not used to extend payment times. In our submission to the inquiry and also our submission to the review of the Victorian Owner Drivers and Forestry Contractors Act, the ATA recommended against big businesses being able to use RCTI to artificially extend their payment terms by delaying the issuing of those invoices,” he said.
The trucking industry consists almost entirely of small businesses. 98 per cent of road freight transport businesses have 19 employees or fewer.