<< previous story  |  next story: How innovative products and horizontal growth have driven Crown Equipment’s success >>

An inquiry to examine payment times and practices in Australia is resonating with NZ trucking firms

Report highlights unfairness
of delayed payments

Small businesses being used to finance large multinationals through delayed payments is not on, says Road Transport Forum chief executive Ken Shirley.

WEB EXCLUSIVE

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), in partnership with the Small Business Commissioners in New South Wales, Victoria, South Australia and Western Australia, and in association with the Council of Small Business Australia (COSBOA) and the Australian Institute of Credit Management (AICM), has conducted an inquiry to examine payment times and practices in Australia. Input was sought from state and territory governments and authorities, along with other relevant stakeholder groups in addition to businesses large and small.

This was the Ombudsman’s first self-initiated inquiry and culminated in the presentation of a final report to the Minister for Small Business, Michael McCormack, in March. Commenting on the findings, Mr Shirley says that large corporations here should not be able to bully small businesses into delayed or deferred payment terms.

“What the Australian inquiry found was that there was a growing trend for large companies to extend payment times to their suppliers out to 45, 60, 90 or even 120 days,” says Mr Shirley.

“It also found that large companies extending payment times for suppliers are effectively using those small businesses as a cheap form of finance, which is just wrong. As many in the transport sector and other industries know, small businesses run on the smell of an oily rag and rely on good cashflow to stay afloat.”

Unfair provisions

Mr Shirley says the ASBFEO has recommended a suite of reforms in Australia that are designed to protect small business, which include legislation to set a maximum payment time for business-to-business transactions, a 15-business working day limit on payment terms, and public disclosure of all large company payment terms and performance.

“While the Australian recommendations are a useful guide, the law in New Zealand is slightly different, which is why the Road Transport Forum is working on a proposal based around the unfair contract term provisions that already exist in the Fair Trading Act,” he says.

“By extending the provisions that exist for consumer contracts to business-to-business contracts, we can restrict the power of large companies to force small businesses into unfair contract terms.”

The Road Transport Forum expects to have a formal proposal to take to the government later in the year.


Go Back