The Australian government has created a small business register that tracks the time it takes for large businesses and government entities to pay their small company suppliers.
The new online Payment Times Reports Register publishes information about the payment policies of businesses with a turnover of more than $100 million. This will allow small businesses to make more informed decisions about who they do business with.
The move will also necessitate big businesses to be upfront and honest about their time to pay their small business suppliers.
Stuart Robert, Minister for Employment, Workforce, Skills, Small and Family Company, said that the Payment Times Reports Register boosted accountability and transparency to ensure timely payments to Australian small business suppliers.
“As a former business owner-operator myself, I understand the vital importance of cash flow for small businesses, and according to Xero, the value of late payments to small businesses is estimated at $115 billion each year; this is a big deal,” Minister Robert said.
“Our Payment Times Reports Register will empower small businesses with the ability to see who is paying on time and who isn’t— another way the Morrison Government is making the lives of small businesses easier.”
The move is likely to benefit industries that rely heavily on small businesses for procurement. Agriculture, forestry, fishing, construction, and administrative and support services all have more than 40% procurement from small businesses.
A welcome move
The Australian Small Company and Family Enterprise Ombudsman, Bruce Billson, welcomed the move, saying that the new registry will encourage major firms to be upfront and honest about how long it takes them to pay their small business suppliers.
“We welcome the Payment Times Reports Register, which reveals the payment policies of more than 6,000 businesses,” Mr Billson said. “It’s an important first step in addressing late payments, which continues to be a huge issue for small businesses.
“While it’s still early days, the register reveals that more than 30 per cent of invoices are being paid late by big business for what has already been earned by small business. That’s incredibly disappointing.
“According to the register, average payment terms are sitting at 37 days – when 30 days is the maximum time any small business should be waiting for their invoice to be paid, and some leading larger companies are committing to pay small business suppliers within a week.
“The manufacturing industry has the most work to do in terms of lifting its average standard payment terms of 50 days, while the media and telecoms industry is among the best performers, pledging to pay their suppliers within 25 days on average.
“My office will be keeping an eye on future reports to gauge trends and do what we can to ensure big businesses are living up to the information provided on the register.
“In the meantime, I encourage small businesses to engage with the register and make informed choices about who they do business with.
“Given much of the Australian small business community has been rocked by the COVID-19 pandemic, prompt payment times are critical.
“Big business has a role to play in the nation’s recovery, and that starts with paying their small business suppliers on time. Adopting e-invoicing is a great way to ensure suppliers are paid promptly. Good business pays.
“Ultimately, cash flow is king for small and family businesses, and if they are paid on time, the whole economy benefits,” he added.
About the scheme
The Payment Times Reporting Scheme requires reporting small business payment terms and times by large businesses and large government enterprises.
- Makes public information about large businesses’ payment performance available to the public
- Helps small businesses in deciding who to do business with
- Creates incentives for faster payment timelines and procedures
The Payment Times Reports Register and further information is available at paymenttimes.gov.au.