'Ridiculous scenario': Late or non-payments big burden for businesses
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'Ridiculous scenario': Late or non-payments big burden for businesses

Barry Skinner hates having to ask for the money he's owed, but it's a situation the Fyshwick business director finds himself in often.

Mr Skinner said his company, electrical contracting firm Pathway Communications, had lost about $100,000 in the last two-and-a-half years because other businesses had failed to pay invoices on time, or at all.

Barry Skinner, whose business Pathway Communications has lost about $100,000 in the past two-and-a-half years through late or non-payment of bills.

Barry Skinner, whose business Pathway Communications has lost about $100,000 in the past two-and-a-half years through late or non-payment of bills.

Photo: Karleen Minney

He said he now spent about 10 hours a week chasing payments.

"It's a ridiculous scenario that costs me money and slows down jobs," Mr Skinner said.

"... It does take a toll because it’s not a nice thing to ask for money for work that you’ve already done.

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"If you lose $100,000, you’ve got to do $2 million worth of work at five per cent profit just to get that $100,000 back."

Mr Skinner, who is also the president of the National Electrical and Communications Association, hopes the situation will soon change.

He has welcomed law reforms designed to make sure tradies get paid on time, which come into effect on September 1.

Changes to security of payment laws mean any business that has expressed interest in or tendered for Commonwealth-funded building work since December 2, 2016, must report any disputed or delayed progress payments to the commission, or be in breach of the law.

Mr Skinner said he had been "burnt" by several firms going insolvent, while some had said they couldn't pay their bills because they were waiting on money themselves.

"The way the building industry works, it’s just like a big house of cards," he said.

"As long as everybody’s paying all their bills all the way down [it’s OK], but as soon as you get one break in the chain of payment, there’s a big flow-on effect."

Mr Skinner said some businesses had lost far more than his, but many were currently reluctant to report the bigger firms who had failed to pay them, because they feared losing future contracts as a result.

" I think what was happening in the past was people having late payments were not reporting because they’re going to be seen as the person dobbing in on somebody," Mr Skinner said.

"With the change in this law, it’s no longer dobbing in, it’s complying with the law yourself."

Announcing the reforms, Australian Building and Construction commissioner Stephen McBurney said companies found to be in breach of the law - whether they were failing to pay or failing to report it - risked sanctions that would prevent them tendering for Commonwealth-funded building work.

He said the commission would help companies that hadn't been paid, where possible, to recover what they were owed.

In a 2017 survey commissioned as part of a Commonwealth government review into security of payment laws, one-third of Australian building and construction sub-contractors said at least 60 per cent of their invoices were paid late.

Seventy-two per cent of sub-contractors said at least 40 per cent of theirs weren't paid on time.

National Electrical and Communications Association chief executive Suresh Manickam said the reforms were a good start, but more needed to be done in order to give small businesses a fair go.

Mr Manickam said state and territory governments should accept the recommendations of the 2017 federal government review into security of payments laws by implementing a wider range of reforms, including a single legislative model to cover the whole country.

Blake Foden is a reporter at The Canberra Times. He has worked as a journalist in Australia, New Zealand and the UK, and joined the Times in March 2018.