The Payment Times Reporting Scheme took effect on 1 January 2024. It requires some large businesses (also known as ‘reporting entities’) to report their payment practices – which include payment times and payment terms – to small business suppliers every six months. This scheme was designed to assist small businesses in overcoming barriers to their working capital.

The reporting entities include Australian companies, foreign entities, partnerships, and trusts that have an enterprise in Australia and a total income of over $100 million. These reporting entities must not be registered charities. Reporting entities must lodge a Payment Times Reporting submission every six months. They will then have three months to compile and submit their report to the Payment Times Reporting Regulator through the web portal.

Reporting entities are required to provide the following details:

•  Terms of payment for small businesses, encompassing standard, shortest, and longest durations;
•  The proportion (calculated by both total count and value) of small business invoices paid within defined payment periods (e.g., 0 to 20 days, 21 to 30 days) from the date of invoicing;
•  The proportion (by value) of total procurement derived from small business suppliers and
   Information on the utilisation and provision of supply chain finance options for small businesses.

A small business is generally identified through the Payment Times Reporting Regulator’s Small Business Identification Tool. Business entities with enterprises in Australia with a turnover of less than AUD 10 million fall under this.

There are penalties for non-compliance – that of 0.6% of annual turnover.