KPMG’s Natalie Brand and Vince Dimasi explore the Payment Times Reporting Amendment in this insightful article that was originally shared with the organisation’s subscribers.
The passage of the Payment Times Reporting Amendment brings changes that may present compliance challenges for reporting entities.
Three years into the ground-breaking Payment Times Reporting (PTR) scheme, the Federal Government sought to introduce amendments to improve the operation of the scheme and to better achieve its objectives.
Following consultation in April this year, the Payment Times Reporting Amendment Bill 2024 (2024 Bill) passed both Houses – with amendments – on 3 July 2024.
The 2024 Bill amends the Payment Times Reporting Act 2020 to implement recommendations outlined in the Government’s Statutory Review of the Payment Times Reporting Act.
With the 2024 Bill’s passage we can identify the implications for both Reporting Entities and the small business economy here in Australia.
The amendments in the new 2024 Bill with the biggest change are:
- Consolidated group reporting: An entity that controls a consolidated group of entities (based on the AASB standards concept of control), will be required to provide a report on behalf of that entire group
- Slow business payer initiative: A new Ministerial power to address slow small business payers which gives the Minister power to require the slowest 20 percent of reporters (based on comparative performance) to publish their status on their website and other documentation
- “Fast small business payer” designation: Businesses that pay a certain percentage of small suppliers within 20 days will qualify for an official “fast small business payer” designation from the Government
Consolidated reporting
To date, Payment Times Reporting has been entity-based submissions with some groups reporting in excess of 50 separate reports for all entities that met the strict requirements of the PTR Act.
Under the new 2024 Bill, an entity that controls a consolidated group of entities (based on the AASB standards concept of control), will be required to provide a report on behalf of that entire group.
The amendment will mean payment times data from all consolidated entities will be compiled into one report and submitted by the top entity in the consolidated group.
On the one hand, while this is seen to reduce the administrative burden of compiling the necessary submission paperwork, the new consolidated reporting may now bring in more data from across the group, potentially increasing the workload for under-resourced finance teams.
Good and bad list
Under the 2024 Bill, businesses that pay a certain percentage of small suppliers within 20 days will qualify for an official “fast small business payer” designation from the government.
This amendment was introduced by the Opposition, with hopes that this “carrot” would encourage faster payment times.
Liberal Deputy Leader Susan Ley envisages that “the new ‘fast small business payer’ designation will be highly sought after and will ensure small businesses can make informed choices about who they choose to partner with.”
The ‘fast small payer’ designation will run alongside the ‘slow small business payer’ list which aims to publicly name and shame the slowest 20 percent of reporting entities within an industry or total population of Reporting Entities.
KPMG considers the implications of falling within this category to be significant, because if a reporting entity meets the criteria for a “slow small business payer” in two consecutive reporting cycles, the entity may then be required to publish a statement that they are a slow small business payer on their website and other documentation.
Implications for businesses
The 2024 Bill introduces several new and revised reporting requirements for reporting entities to consider.
The new amendments look to simplify processes and reduce the administrative burden for reporting, new concepts and criteria’s proposed necessitate overhauls of existing reporting capabilities and frameworks.
However, reporting entities will need to adapt and re-assess their current practices developed over their reporting journey to date.
In addition, the introduction of both a fast and slow payer designation places significant focus on payment performance as Payment Times Reporting moves away from being purely a compliance report.
What action should companies take?
As we enter the next stage of the scheme and what could shape up to be a period of continued change to the Payment Times Reporting Scheme, staying informed on the progress of the reform and up to date on the new guidance will be key in ensuring your business is prepared to adapt under this evolving regime.
KPMG’s Payments Advisory Team has a range of services to support you on your Payment Times Reporting journey.
Contact KPMG to discuss how the latest changes will impact your PTR reporting.
