A study undertaken last year highlighted a reality that the small business sector has been grappling with for years — that long and late payment times (more than 30 days) to small businesses adversely affects not only on these businesses but also more broadly across the economy, with a ripple effect meaning businesses that are paid slowly pay their suppliers more slowly in turn, and so on.
To help address the issue, the government introduced the Payment Times Reporting Scheme, which requires large businesses and large government enterprises with a total annual income of more than $100 million to publicly report on their payment terms and practices for their small business suppliers (in this instance, defined as having turnover of less than $10 million a year).
The legislation for the scheme has just been passed by the Senate, with an intended commencement of 1 January 2021. A secondary bill accompanied the primary legislation which basically allows the Commissioner to disclose relevant information to allow administration of the scheme.
Large business (annual income of more than $100 million a year) will be required to report their small business payment information to a central web portal twice a year. Information from these reports will be made available on a public website for small business and other interested stakeholders.
It is also intended that a Payment Times Reporting Small Business Identification Tool will be developed to assist large businesses in the process of identifying their small business suppliers.