The Payment Times Reporting Bill 2020 will legislate transparency for large business payment times by requiring large businesses to report their payment policies, providing small businesses with information to enable them to identify their customers.
Businesses with a total annual income of over $100 million will be required to report on how and when they pay their small business suppliers.
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the legislation, noting that prompt payment times are critical to the survival of the small business community, which has been “devastated” by the COVID-19 health and economic crisis.
“This reporting framework will require big businesses to be up front and honest about the time it takes to pay their small business suppliers. It will be important that the information reported is easy to access and integrate,” said Ms Carnell.
“This gives small businesses some choice around who they do business with.”
Importantly, the legislation will apply to around 3,000 Australian large businesses, including foreign companies that carry on an enterprise in Australia along with certain government enterprises.
It also defines small business as those that have a turnover of less than $10 million, which, Ms Carnell noted, covers 99 per cent of businesses.
“My office will be invoking the powers we have to investigate any reports of big businesses failing to live up to the information provided on this register once it is implemented,” said Ms Carnell.
She, however, urged more action from the government to ensure small businesses aren’t being taken advantage of.
“We support the Payment Times Reporting Framework as one piece of the puzzle, but it won’t solve the problem of late payment times on its own,” said Ms Carnell.
“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy.
“Ultimately, cash flow is king for small business and we know that if small businesses are paid on time, the whole economy benefits.”
