Non-binding motion calls for businesses to adopt 30-day payment terms.
Australia’s politicians have thrown their support behind trucking firms grappling with late-paying customers, with federal senators passing a motion calling on businesses to settle accounts within 30 days.
While the motion is non-binding, it continues the focus on late-paying customers that are pushing out payment terms to 120 days in some cases.
The motion is the work of senators John Williams and Glenn Sterle, who both took aim at businesses last year for their treatment of trucking operators.
Passed on February 2, the motion notes that lengthy payment terms may affect a trucking firm’s ability to meet its financial commitments and maintain its vehicles.
Saying that any reduction in vehicle maintenance could lead to serious accidents or fatalities, the motion calls on businesses “to adopt payment terms not exceeding 30 days”.
“…some large companies have been unfairly asking trucking operators to accept extended payment terms of up to 120 days which is not in the spirit of a harmonious business relationship,” the motion states.
“…the resultant impact on a trucking operator’s cash flow may affect their ability to meet their own financial commitments, such as, for wages, lease payments and maintenance of their vehicles…”
If businesses adopt the motion, the payment term will align with the Road Safety Remuneration Tribunal’s (RSRT) requirement for contractor drivers to be paid within 30 days of completing work.
The issue of payment terms was raised constantly throughout 2015, with the Transport Workers Union (TWU), the Australian Trucking Association (ATA) and NatRoad all arguing for customers to reduce terms.
The ATA says it welcomes the passage of the motion, and its CEO Chris Melham says trucking businesses need to be wary of extended payment terms being slotted into their contracts.
“We know there’s sometimes a perception in trucking that if the wheels are turning, you’re all good,” Melham says.
“But operators that agree to extended payment terms still need to pay their own creditors on their existing cycles. For example, this could include 21 day payments to fuel suppliers, 30-day payments to small owner-driver subcontractors, and weekly or fortnightly payroll payments.”
The ATA says it is currently developing a contract checklist for the industry that will include guidance on setting payment terms for trucking operators and their customers. The list is due to launched at the ATA’s annual event, Trucking Australia, in June.
FBT Transwest boss Cameron Dunn spoke publicly last year about long payment terms becoming a common part of contracts put to tender.
“It is more common now that contracts will come out that’ll push for 120 days,” Dunn told attendees of the TWU’s road safety summit.
TWU national assistant secretary Michael Kaine wants the RSRT to introduce mandatory 30-day payment terms throughout the trucking industry.
Kaine says current practices are unsustainable and pushing companies to the brink of financial ruin.
Photography: Brad Gardner