The Payment Times Reporting Amendment Bill 2024 (Draft Bill) was introduced into the House of Representatives last week, following an in-depth review and several recommendations for improvement.
Last year’s review by Dr Craig Emerson found that the Payment Times Reporting Act 2020 is ineffective, suggesting that its main challenge is its unwieldy legislative requirements which overburden the regulator and make the reporting system burdensome.
Minister for Small Business Julie Collins said the Draft Bill, which will overhaul the existing Act, will level the playing field and encourage large businesses to treat their small business suppliers fairly.
“Small businesses are the backbone of the Australian economy, employing more than five million people and contributing more than $500 billion to the national economy,” said Collins.
“For small businesses who supply goods and services to large companies, it’s simply unfair for those big corporations to delay paying the invoice.
“Imagine walking into your local cafe, getting a coffee and saying, ‘I’ll pay for that in 90 days’. It’s simply unthinkable, just as it should be unthinkable for big businesses to create long delays when paying their small business suppliers,” she added.
The reforms will include:
- Updates to the objects of the Act that reflect the purpose is improved outcomes for small businesses and incentivising large businesses to make prompt payment
- A shift to consolidated reporting in accordance with Australian accounting standards to improve the quality, completeness and comparability of reported data
- Streamlining reporting obligations and decreasing regulatory burdens through reduced and simplified reporting content requirements, and introducing greater flexibility to remediate non-compliance and modify obligations in exceptional circumstances
- Expanded regulator functions to include research, publishing and outreach. This will enable the regulator to undertake a range of activities, including naming best and worst-paying large businesses and undertaking research on the economy-wide impacts of slow payment
There will also be a mechanism for the small business minister to give a direction to an entity in the slowest 20 percent of payers (overall or by industry) to make enhanced disclosures.
The minister can direct a slow-paying entity to state on its website and in its procurement, ESG-related and other documents that it is a ‘slow small business payer’ and provide information on how to access its Payment Times reports.
The Payment Times Reporting regulator will then place a record in the Payment Times Reporting register that reflects this.
Natalie Brand, Associate Director of the Payment Times Reporting Advisory, called the changes a ‘milestone’ and urged businesses to stay informed as the scheme evolves.
“The Draft Payment Times Reporting Amendment Bill 2024, released in April 2024, marks the latest development in the Payment Times Reporting landscape. The new reforms propose significant changes to the scheme, including redefining the criteria of a reporting entity, consolidated group reporting and disclosing slow paying large businesses,” said Brand.
“The Draft Bill represents another milestone in regulatory efforts to enhance the operations of the scheme, promote transparency and reflect the Government’s commitment to improving payment practices to small business suppliers, following the two-year independent statutory review released in 2023.
“As we enter the next stage of the scheme and what could shape up to be a period of continued change, staying informed about the progress of the reform and keeping up to date with the new guidance will be key to ensuring your business is prepared to adapt under this evolving regime.”
KPMG’s expert Payment Times Reporting team will hold a webinar on the upcoming changes on 25th June 2024 at 11am AEST.
If you would like to attend, contact the KPMG team at au-fmptr@kpmg.com.au
