The Commonwealth Government is committed to encouraging fairer and faster payment times and terms for small businesses.
Small business supplies around $138 billion in trade of goods and services to large business in Australia. There is international evidence that reducing long payment times to small business can make the small business sector more resilient by improving cash flow and boosting employment and wages.
To address this issue, the Commonwealth Government announced on 21 November 2018 that it would introduce a new Payment Times Reporting Framework.
The framework will require large businesses with over $100 million in turnover to publish payment information on how they engage with small businesses. It will cover up to 3,000 of the largest businesses in Australia – including foreign companies and government entities.
The framework’s overall goal is to improve payment outcomes for Australian small businesses. To achieve this, it has three objectives:
- Improve the collection of information about the payment practices of large businesses and government agencies towards small business.
- Make information about payment practices visible and easily accessible to small businesses and other interested stakeholders.
- Minimise the compliance and administrative burden associated with the reporting framework for government agencies, large and small businesses.
In February 2019, the Department of Jobs and Small Business, supported by economics analytics firms AlphaBeta and 89 Degrees, sought feedback from stakeholders on possible options for implementation of the the Payment Times Reporting Framework (the framework). Stakeholders were invited to lodge a written submission to the framework discussion paper. They were also invited to attend consultation workshops held in Perth, Sydney and Melbourne, or participate in an online consultation workshop.
The department is encouraged by the industry engagement and valuable feedback received. Feedback received has been integral in drafting framework options. Whilst there is a diverse range of views on how a reporting framework should be implemented, overall stakeholders are supportive of improving cash flow and long term financial sustainability to small businesses.
Following initial stakeholder consultations, the department is progressing next stages by primarily focusing on costs and benefits of various implementation options. The cost benefits modelling will assist in determining the optimal framework option. The department will also continue consulting with stakeholders to progress implementation and further define outstanding complex policy questions.
If you would like to subscribe for updates on the Payment Times Reporting Framework please fill in the form below or email PaymentTimes@jobs.gov.au.