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Payment times legislation passes in senate

The Senate has passed significant reforms to the Payment Times Reporting Act 2020, aiming to eliminate inefficiencies, streamline processes, and incentivise large businesses to improve their payment practices.

The revamped legislation introduces consolidated reporting under Australian accounting standards to enhance the quality, completeness, and comparability of reported data.

Key Changes and Regulatory Powers

Once implemented, the bill will empower the regulator to name and shame the best and worst-paying large businesses and conduct research on the broader economic impacts of slow payments. Additionally, the minister for small business will have the authority to direct entities in the slowest 20 percent of payers to make enhanced disclosures. These entities will be required to state on their websites and in relevant documents that they are ‘slow small business payers’ and provide information on accessing their payment times reports. The Payment Times Reporting Regulator will then list these entities in the Payment Times Reporting Register.

Government Commitment to Small Businesses

Speaking before the Senate, Senator Carol Brown emphasized that the revised framework aims to improve cash flow for smaller businesses, reduce administrative burdens, and lower financing costs. “Small businesses are the backbone of the Australian economy, employing more than 5 million people and contributing over $500 billion to the national economy,” Senator Brown stated. “For small businesses that supply goods and services to large companies, it’s simply unfair for those big corporations to delay paying the invoice.”

Industry Reactions

Luke Fossett, General Manager of GoCardless Australia and New Zealand, hailed the passage of the payment times reform as a positive development for small and medium-sized businesses (SMBs) struggling with late and failed payments. “This is good news for big businesses too, as those that pay their suppliers on time and support Australia’s SMBs will now receive positive recognition,” Fossett noted.

He highlighted findings from the recent Pursuing Payments report, which revealed that one in five Australian small business owners and decision-makers estimate losing between $6,000 and $30,000 annually due to late payments. “Improving payment times is a net good for local businesses, and we’re hopeful these reforms will create meaningful change.”

Fossett also pointed out the disproportionate impact of late payments on women, noting that 29% of women feel uncomfortable asking customers for payment, rising to almost 46% when chasing late payments, compared to 26% and 40% of men, respectively. “Helping businesses get paid faster will create net benefits not only for the businesses themselves but also for their employees and the broader economy.”

The changes to the Payment Times Reporting Act follow a review by Dr. Craig Emerson last year, which made several recommendations to improve the scheme’s operation. The legislation’s passage marks a significant step toward fairer payment practices and stronger financial health for small businesses across Australia.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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