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The government will implement all the recommendations of the Payment Times Reporting Scheme review, minister says.
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Name-and-shame regime to clamp down on late payers
06 December 2023
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10 minute read
The government will name and shame big companies that leave small business waiting too long for payment and approves all the recommendations from the recent review of the Payment Times Reporting Scheme.
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The review, by Dr Craig Emerson, reported in August that the scheme needed a comprehensive overhaul because it produced “impenetrable” data and had failed to materially reduce payment times.
It found the regime was so unwieldy the resulting data “cannot even reveal a reporting entity’s average payment time to small-business suppliers and how often it pays on time”.
In its response, the government said it would amend the relevant act to simplify and streamline reporting, consolidate reporting for corporate groups, add more regulatory powers and address inefficiencies with current reporting processes.
“Improving the quality and usefulness of reporting is a priority for the government and it will work to implement amendments as soon as practicable,” Treasury said.
The government agreed with the review that reporting alone would fail to incentivise big business.
“To drive better outcomes for small businesses reporting we must also call out the poor conduct of large businesses and celebrate best practices,” it said in the response.
“Dedicated education, awareness raising and advocacy for better payment practices is necessary to take full advantage of payment times reporting.
“In addition to publishing large businesses who are non-compliant, naming and shaming will also provide clarity for large businesses on the expectations for payment practices and promote payment times as a measure of ESG commitment.”
It would highlight large businesses with good payment times as standard setters for their industries and create publicly available tools to access, interpret and compare payment performance.
As part of an $8.1 million commitment, it would also ensure payment times were a factor in policies such as unfair trading practice reforms, e-invoicing and government procurement.
Minister for Small Business Julie Collins said there was a significant power imbalance that gave big business an advantage.
“Small business owners have limited means and resources to address unfair or unexpected cashflow pressures and have less access to affordable alternative financing options,” she said.
“In many cases, small businesses lack the market power to negotiate better payment outcomes, particularly with large businesses customers.
“Large businesses with bargaining power can operate on ‘take it or leave it’ payment terms, leaving small business suppliers no option but to lose business or accept long payment terms and late payments.”
“These initiatives announced today will level the playing field to ensure small businesses are paid on time.
“This is a matter of fairness – big businesses should not take advantage of Australia’s 2.5 million small businesses by failing to pay them on time.”
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