Payment Times Reporting

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 30 June 2025 where the lodgment date would otherwise fall at an earlier date.

More information on the changes can be found in the following Insights Articles:

Payment Times Reporting Amendments (10 July 2024)
New Payment Times Reporting Scheme - regulations (26 September 2024)

Our specialist Payment Times Reporting team can help determine where your business ranks among the slowest 20% of all small business payers, and among 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'. Our team can also assist with analytics to help identify which payments and vendors to address that will result in the greatest improvement to your payment times ranking.

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.

09/09/21

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

Provide you with access to analytics to help target which payments and small business vendors to address that will result in the greatest improvement to your payment times ranking.

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