Ensuring fairer payment terms for small businesses
Australia’s large businesses will have to report on their use of questionable practices to small business suppliers with the release of the Payment Times Reporting Scheme Rules and Guidance Material.
Under the Morrison Government’s Payment Times Reporting Scheme large businesses with a total annual income of over $100 million will have to report publicly on how and when they pay their small business suppliers.
The Rules will require large businesses to detail their small business supply chain financing arrangements, such as reverse factoring. This will ensure small businesses are fully informed about the large businesses that use these types of arrangements.
Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash, said small businesses will for the first time have the opportunity to find out how large businesses pay their small business customers.
“This will allow our small businesses to make informed decisions about who they do business with,” Minister Cash said.
“Shining a light on large business payment performance will lead to fairer and faster payments for Australia’s 3.5 million small and family businesses.
“I welcome the recent decision from major contractor CIMIC Group to move to 30-day payment terms for its small business suppliers next year when the Morrison Government’s Payment Times Reporting Scheme comes into effect.
“This clearly demonstrates the role transparency and community expectation have in enforcing faster and fairer payment practices.”
Minister Cash said that the Government recognises that supply chain financing can offer a real choice for small businesses but is concerned when these arrangements are used to push out payment times.
After an initial 12-month transition period, civil penalties will apply to reporting businesses that fail to report or give the Payment Times Reporting Regulator a false or misleading report.
For more information about the scheme, including the Ministers Rules and Guidance, visit industry.gov.au/regulations-and-standards-payment-times-reporting-scheme.
The Scheme commences on 1 January 2021.
Minister Cash's office: 02 6277 7610