We strongly encourage members who provide services to large businesses or government enterprises to become familiar with the Payment Times Reporting Scheme.
Why? Because, as we all know, cash flow is vitally important and the Scheme reveals how quickly large organisations pay invoices from small businesses. If you're a small business owner, this is the kind of information you need to know when deciding who to business with.
About the Scheme
The aim of the Scheme, which began in January 2021 and is administered by the Payment Times Reporting Regulator, is to improve payment times for Australia’s small businesses. The idea is to force large businesses and large government enterprises to submit regular reports on how they pay their small business suppliers. The information in these reports is publicly available, allowing small business owners to take it into consideration before deciding whether to sign contracts.
The Scheme defines a large business as one that has an annual turnover over $100 million, or over $10 million if part of a group with a total turnover over $100 million.
A small business is defined as one that operates in Australia, has an ABN and an annual turnover below $10 million.
How the scheme works
Entities that meet the criteria for mandatory reporting are called 'reporting entities'. They must use the Payment Times Reporting Portal to submit their reports twice a year, within three months of the end of each six-month reporting period.
For example, if a company’s financial year ended on 30 June 2021, their first reporting period under the scheme was January to June and their deadline for submitting their Payment Times Report was 30 September 2021.
Reports include aggregate data about standard payment periods and the proportion and value of invoices paid within specified time bands. Once submitted, they are freely available to the public.
Small Business Identification Tool
One of the key features of the Scheme is the Small Business Identification (SBI) Tool, which assists large businesses to identify their small business suppliers.
Any business that has an ABN, operates in Australia and has an annual turnover under $10 million is automatically included in the SBI Tool, meaning there is no need to opt in. A small business owner can choose to opt out by using a process that involves using myGovID to register their business in the Payment Times Reporting Portal. Once they've done this, payments that large businesses make to them will excluded from the aggregate data in the reports.
Business owners can also use the SBI Tool to check the details that have been recorded about their business and update anything that is incorrect.
What you need to do
If you have a business with an annual turnover below $10 million, you do not need to do anything unless you want to opt out of the Small Business Identification Tool or use it to check that your details are correct.
If you have a business that falls under the definition of a large business, you should make yourself aware of the details of the scheme and your reporting obligations.
Where to find all the details and get started
All the details about the Scheme, how to use it and how to view the reports are available via the Payment Times Reporting Scheme website.