Login
iscover
The proposed overhaul will be a “shot in the arm” for small businesses by improving cash flow and reducing red tape, the government says.
Newsletter
Draft legislation released to name and shame late payers
17 April 2024
•
10 minute read
Serial late-paying businesses will be named and shamed while the payments watchdog will receive stronger powers under long-awaited reforms to “level the playing field” for small businesses released this week.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The draft legislation enacts all recommendations made by Dr Craig Emerson in his review of the Payment Times Reporting Act, which last year called for an urgent overhaul of the “impenetrable” and “poorly functioning” regime.
Small Business Minister Julie Collins said the new reforms would “level the playing field” for small businesses by holding large businesses to account.
She said they would be a “shot in the arm for small business” in particular, improving cash flow while reducing administrative burdens and financing costs.
“The proposed legislation introduces mechanisms that increase pressure on large businesses to improve their payment times to small businesses ... it will simplify reporting, reduce regulatory burdens,” she said.
Key amendments include expanding the act’s object clause to “foster a culture of prompt payment by large business and certain other entities for small business suppliers”.
The reforms also include long-awaited name-and-shame provisions to exert influence over big business’ behaviour – an idea that has been floated since 2018 by the Morrison government.
Under the proposed act, businesses will be classified as “slow small business payers” if they come within the slowest 20 per cent of small business payers in a reporting cycle.
Those that come within this definition will be forced under a “slow small business payer direction” to publish this information on their website and other documents, with their status also recorded on the late payments register.
According to the new rules, the direction would remain in effect until the earliest of the following dates: the day they provide a payment times report with a 95 per cent payment time of 30 calendar days or less, the end date specified under the direction, one year after the direction is given or if the minister revokes the direction.
The Payment Times Reporting Regulator will also receive more powers to undertake research and publish analysis on payment terms and practices to support the act’s objectives.
It will also have new information-gathering powers to force businesses to produce information or documents when asked, as well as scaled-up audit, monitoring and investigation powers.
Finally, an enforceable undertaking framework has been inserted, applying to breaches subject to civil penalties.
This would ensure “the regulator can effectively investigate and punish on the register an entity’s non-compliance with the act”.
Draft legislation and explanatory memorandum would be open for comment until 29 April, with consultation expected to follow, the government said.
You need to be a member to post comments. Become a member for free today!
