The 3,000 largest businesses in Australia will be legally obliged to report on how quickly they are paying suppliers as part of new legislation introduced into Parliament.
The Payment Times Reporting Bill aims to prevent late payments impacting on Australia’s 3.4m small businesses by obliging businesses with a turnover of more than $100m to publish information on SME payment times and practices.
Kate Carnell, small business and family enterprise ombudsman, welcomed the legislation, which she had pressured the government to introduce.
“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 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.”
Carnell said the legislation would give 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 an enterprise in Australia along with certain government enterprises,” she said.
The new laws define small businesses as those with a turnover of less than $10m – this means it will cover 99% of Australian 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,” Carnell said.
She added that while she supported the Payment Times Reporting Framework it was only “one piece of the puzzle” and would not solve the problem of late payments by itself.
The only way to drive meaningful cultural change in business payment performance was by introducing legislation requiring SMEs to be paid in 30 days, she said.
“Ultimately, cash flow is king for small business and we know that if small businesses are paid on time, the whole economy benefits,” Carnell added.
A report by consultancy Xero last year revealed late payments from big businesses costs small businesses $7bn a year.
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