The Payment Times Reporting Bill will see the establishment of a Payment Times Reporting Scheme, which will be reviewed after three years, and will provide for the creation of a Payment Times Regulator, ensuring entities that fail to pay on time are known to the small business community.
“This legislation will bring greater transparency, requiring businesses with over a $100 million turnover to publish their policies including payment times,” said IPA chief executive Andrew Conway.
“We appreciate that businesses are doing it tough in this COVID-19 pandemic environment, but small businesses still need to be paid on time to help keep them afloat.”
The ASBFEO’s final report on its Payment Times and Practices Inquiry points to the fact that a lack of cash flow is the leading cause of business insolvency and this underscores the importance of the issue of late payments, which can easily put many businesses out of operation.
“The ACCC has highlighted of big businesses refusing to pay small business suppliers or in some cases, trying to renegotiate pricing that had been agreed upon after the product or service has been delivered,” Mr Conway noted.
He explained that the power of the regulator to publish information about a reporting entity that has failed to comply with the act will provide transparency to small businesses using the register, allowing them to determine the companies they will engage with.
“As the legislation defines small businesses as those with a turnover of less than $10 million and therefore, 99 per cent of businesses, it is hoped that small businesses will get a fairer go,” said Mr Conway.
“The IPA has been a long-time advocate of legislating payment times, given that Australia has one of the worst records for payment times to small business compared to many other countries. Hence, we support the ASBFEO recommendation that all small businesses should be paid within a 30-day time frame. We hope that this will happen well in advance of the three-year review.”
