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Australia’s Payment Times Reporting Scheme was introduced from 1 January 2021.
Every six months, entities, mostly large businesses and some government enterprises, must publicly report on their small business supplier (defined as businesses with turnover below $10m p/a) payment terms and practices. Penalties for non-compliance can be up to 0.6% of an entity's total revenue.
Amendments to the Payment Times Reporting Act have now been passed by Parliament, following a two year independent review of the Scheme. The amendments introduce changes for reporting periods starting on or after 1 July 2024. Businesses should be aware that under these changes:
groups will assess their requirement to report against the $100m revenue threshold by comparing to their consolidated accounting revenue,
groups will be required to produce consolidated payment times reports, instead of the current entity-by-entity approach,
- the slowest 20% of small business payers can be forced to publish on their website and other documentation that they are a ‘slow small business payer’,
- a list of ‘fast small business payers’ (who have a qualifying payment time of 20 days or less) will be published publicly by the Regulator, and
- the lodgment date for the first report under the new rules will be automatically extended to 1 July 2025 where the lodgment date would otherwise fall at an earlier date.
More information on the amendments can be found in our Insights Article.
Our specialist Payment Times Reporting team can help determine where your business ranks among the slowest 20% of small business payers in your Industry Division based on your last 12 months of payment times reporting data, and help determine what improvements would be required to your payment times to mitigate the risk of being a 'slow small business payer'.
The PwC Payment Times Reporting Solution supports businesses to comply with the Payment Times Reporting Scheme, including meeting all requirements under the new rules post 1 July 2024, while also identifying opportunities for process improvements.
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PwC's Payment Times Reporting Solution
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Why were the Payment Times Reporting rules introduced?
In April 2017, the Australian Small Business and Family Enterprise Ombudsman reviewed payment times and practices in Australia and identified that late payment and extended payment times were impacting business of all sizes.
The Government has introduced this mandatory public reporting scheme as part of its commitment to improving payment times from large to small businesses.
Who does this apply to?
For periods post 1 July 2024 under the amended rules, the PTR Scheme will apply to entities and groups where accounting consolidated income is greater than $100m p/a.
For periods commencing pre 1 July 2024, the PTR Scheme will apply to entities and groups where:
- Total Income greater than $100m p/a; and/ or
Subsidiary's total Iincome greater than $10m p/a if the entity is part of a group with a combined total income of greater than $100m p/a.
What needs to be reported?
Large entities will need to report information on how and when a business pays their small business suppliers. Some details include:
Standard payment periods to small businesses (including the most common, shortest & longest).
The proportion (by total number & total value) of small business invoices paid within the following payment brackets from the issue date of invoice:
Less than 21 days
21-30 days
31-60 days
61-90 days
91-120 days
120+ days
The proportion (by value) of procurement from small business suppliers
Details of use/offers of supply chain finance to small businesses.
What is the consequence of non-compliance?
There are material financial penalties for:
Failing to report - up to 300 penalty units per day (a total of A$ 99,000 per day)
- Producing a false or misleading report - up to 0.6% of annual turnover (i.e. up to $3m for a business with turnover of $500m)
- Failure to keep records - up to 0.2% of annual income (i.e up to $1m for a business with turnover of $500m)
The identity of non-compliant entities and details around non-compliance, can also be reported publicly on the Register.
- Understanding which entities need to report
- Identifying applicable small business suppliers
- Ensuring invoice receipt and payment remittance dates are accurately captured in systems
- Identifying and extracting required data, particularly complex for large groups with multiple Procure-to-pay processes
Accurate and timely reporting to avoid significant penalties
Understanding where your business stands against the slowest 20% of payers to small business in your ANZ Standard Industrial Classification (ANZSIC) Division
Potential reputational impacts of public disclosure of the performance data, and for slowest payers to be forced to disclose on business website and other documentation under the new changes
- Manage public profile by improving payment times to small businesses
- Increase efficiency in end-to-end P2P processes
- Adopt differentiated payment terms for small business
- Improved insight over procurement processes and performance
- Peppol e-invoice adoption to enable faster invoice processing and improved payment times
How can PwC help?
- Assessing impact of the 1 July 2024 Law Changes
- Reporting set-up
- Data & Automation
- P2P Process optimisation
Assessing impact of the 1 July 2024 Law Changes
Review whether your group will exceed the new revenue threshold by reference to consolidated accounting revenue
Determine how your payment times report preparation process will need to change to take account of the new consolidated reporting requirements
Determine where you rank among the slowest 20 percent of small business payers in your ANZSIC Division to assess your risk of being a ‘slow small business payer’, and determine what improvements would be required to your payment times to mitigate this risk
Assess how the use of subsidiary reporting entities will impact your reporting requirements, including where these subsidiary reporting entities rank among the slowest 20 percent of small business payers, and assist with applications to the Regulator
Assist with understanding whether you can apply to be an ‘exempt entity’ under the new exemption rules based on your facts and circumstances, and assist with submitting an application to the Regulator
Reporting set-up
Advice and guidance on which entities are required to report and on what payments
Review of your PTR to ensure that it meets the requirements of the law and the Regulator
Workshop to inform and empower you comply with your PTR obligations
Guidance to determine data requirements from your end-to-end procurement processes
Identify gaps in data requirements and provide solutions to bridge those gaps
Data & Automation
Oversight of your PTR profile through data visualisation
Identification of outliers in your PTR for review and investigation through visualisation
Review of your vendor master file for accuracy and completeness using our Comply First Time automation solution
Automation of the return preparation process to remove manual process and risks
Continuous monitoring of your PTR profile
P2P Process optimisation
Optimise end to end Procure to Pay processes (business process mapping, current state analysis, future state design & implementation)
Financial controls design & optimisation
Process automation/RPA & process intelligence
Cash flow management strategies/ working capital optimisation
Accounting advice for supply chain finance
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