Businesses are now obligated to publicly disclose the payment terms and times in their dealings with smaller suppliers, with the Payment Times Reporting Act having come into effect on January 1.
The Act aims to address the issue of delayed payments impacting the cash flow and financial buoyancy of smaller suppliers – a hill Prime Minister Scott Morrison defended in 2018, claiming small businesses shouldn’t be used as a bank.
Under the new Act, entities that generate an income over $100 million will be required to report two times a year on specifics such as their payment periods to suppliers, and how many were paid within certain timeframes of an invoice being issued (20 days, 30 days, 60 days, etc) – with an eye to get businesses to match the Government’s 20-day payment policy to small suppliers.
A business must issue its report within three months of the end of a six-month reporting period, with the first reporting period beginning January 1, making the first report due on September 30.
Following a one-year penalty-free period where businesses are expected to familiarise themselves with the process, reports can be made public at the discretion of the Payment Times Reports Regulator and can lead to fines of up to 0.6 per cent of a business’ total income.