Freelance Australia calls for government regulation on late payments

By OWEN HUCK

A prominent freelancer advocacy group has called on the Federal Government to do more to stop the common practice of late payments for freelance work.

Founder of Freelance Australia Cameron Rambert said government regulation of payment terms should be “tighter and more explicit”.

Cameron Rambert
Cameron Rambert

Mr Rambert experienced late payments after a client refused to follow an agreed payment plan. Instead the client told him they would pay 90 days after work was completed on the five-month project.

“I wouldn’t actually see any value for the work for eight months, which is pretty crazy if you think about it,” Mr Rambert said.

“But a lot of freelancers get bullied into those situations,” he said.

Mr Rambert said many businesses preferred to wait until customers paid before settling with contractors, but individuals should not be treated like a business when it came to payment terms.

“You wouldn’t pay your employee after eight months,” Mr Rambert said.

“My theory is that if you don’t expect it out of your employee, you don’t expect it out of your freelancer.”

Mr Rambert said freelancers needed to set their own protection mechanisms to complement any government support, but only “the top 0.01 per cent of people” had the power to set payment terms with a client.

Communications freelancer Nicole Leedham faced a $10,000 “perfect storm” of unpaid invoices that forced her to refinance her mortgage to pay a gas bill.

Twenty-seven per cent of small businesses in Australia borrow to cover late payments, according to a study by Paypal and Inuit.

Campaigning hard for on-time payment.
Campaigning hard for on-time payment.

“I do think the Government doesn’t pay a lot of attention to that [small business] segment of society. And certainly not sole operators,” Ms Leedham said.

Ms Leedham said she “learned the hard way” how best to avoid late payment, though she had encountered rookie freelancers without her know-how.

“Someone will say, ‘You know I’ve done this work and they haven’t paid me.’ And all of us experienced ones say well did you take a deposit? What are your terms and conditions?” she said.

“You really have to have that mindset that you’re running a small business.”

The Australian Small Business Ombudsman, Kate Carnell, has announced plans for an inquiry into late payments to small business, which she says will include freelancers.

“We do pay attention [to freelancers], because contracting, sole proprietors, consultants and so on, it’s a growing part of the workforce,” she said..

infographic5“We’ve done a consultation with small businesses. What came out of that, right at the top of the list, was payment times.”

Council of Small Business of Australia  has suggested an alternative solution to government regulation, calling for a voluntary code of conduct to prevent late payment.

The council’s CEO, Peter Strong, supports regulation in theory.

“Let’s give the market time to adapt, to change, and if they don’t then we will legislate,” Mr Strong says.

Owen Huck’s story was first published on his own blog