Small business advocates have welcomed the introduction of the Payment Times Reporting Bill 2020 which will deliver transparency around the way big business pays their small business counterparts.
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says the Bill will require big businesses to be upfront about how quickly they pay suppliers.
“Much of the Australian small business community has been devastated by the COVID-19 health and economic crisis and prompt payment times are critical to their survival,” Carnell said.
“This reporting framework will require big businesses to be upfront 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. This gives small businesses some choice around who they do business with.
The legislation will apply to around 3,000 Australian large businesses, including foreign companies that carry an enterprise in Australia along with certain government enterprises with all business defined as businesses that have a turnover of less than $10 million.
“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, Carnell said.
The Institute of Public Accountants (IPA) has welcomed the introduction of the Payment Times Reporting Bill 2020, saying its implementation will go a long way to help small businesses that are struggling with cash flow issues.
“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 officer, 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 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,” says Conway.
The Bill will see the establishment of a Payment Times Reporting Scheme which will be reviewed after three years. It also provides for the creation of a Payment Times Regulator. The Bill also allows the Regulator to publish information about a reporting entity that has failed to comply with the Act. This will provide transparency to small businesses using the register, allowing them to determine the companies they will engage with.
“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,” Conway said.
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