According to the Payment Times Reporting Regulator’s July 2024 update, 36 percent of reporting entities are more than 60 days late in making 95 percent or more of their small business payments.
In the Reporting Cycle 6 report – which covers the reporting periods ending between 1 July 2023 and 31 December 2023 – only 21.4 percent of entities made 95 percent or more of their payments to small suppliers within 30 days, compared to 17.3 percent in the first cycle.
Reporting entities improved their average payment terms offered to small businesses to 35.2 days, which is only a slight reduction from the 37.1 day average revealed in the first half of 2021 when reporting began.
Of the 11,702 reporting entities, 73 percent make payments to small businesses, while 30 percent of total procurement value is with small businesses on average.
The industry with the highest average proportion of small business procurement (by value) is agriculture, forestry and fishing at 44 percent, with mining on the other end of the scale at 23 percent.
Payment Times Reporting Regulator Mary Jeffries touched on the Payment Times Reporting Amendment Act 2024, saying she will introduce the reforms starting on 7 September 2024.
“The reforms bolster the Regulator’s compliance function with new powers to gather information with a notice to produce. These powers will require entities to provide information that the Regulator can use to verify and address suspected non-compliance,” said Jeffries.
“Over the next six months, there will be significant activity, including the finalisation of new Payment Times Reporting Rules (currently open for consultation), an overhaul of guidance materials, updates to the Payment Times Reporting Portal, and ongoing efforts to enhance the Register. We are also establishing a research function to identify and highlight both best and worst payers and promote good payment time practices.”
Across the Reporting Cycle, the average proportion of payments occurring within 30 days was 69.2 percent, which was a small increase compared to the 63.4 percent reported in the first cycle.
Education and training made 84 percent of all payments to suppliers within 30 days, with manufacturing the slowest at 53 percent.
Public administration and safety led the way with the shortest average payment terms at 27 days, while manufacturing once again fell to the bottom of the pile at 44 days. The average sat at 35 days.
Commenting on the findings of Reporting Cycle 6, Jeffries said marginal improvements had been made in payment times and terms, which is consistent with the slow rate of improvement since the Scheme’s inception.
“However, a significant concern remains regarding long payment times,” she said.
To learn more about the Payment Times Reporting Amendment Act 2024, see PASA’s recent article from KPMG.
