Published on May 25, 2020
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The Federal Government has introduced legislation requiring big businesses to be transparent about their payment times to the small business suppliers.
The Australian Small Business and Family Ombudsman (ASBFEO) announced a review into the impact of supply chain financing on the small business and family sector in October 2019.
The review looked at specific industry sectors, along with the broader impacts on small businesses using this finance and related reporting practices by big business.
According to ASBFEO’s Kate Carnell since the review there had been a significant number of small businesses reporting finance issues to the ASBFO and to address the issue it was then recommended that the payment times be legislated.
Now that the legislation has recently being passed, The Payment Times Reporting Bill 2020 requires businesses with turnover of more than $100 million to publish information about their payment policies and defines Small Businesses as those that have turnover of less than $10 million.
The legislation applies to around 3,000 Australian large businesses, including foreign companies that carry an enterprise in Australia along with certain Government enterprises.
Majority of Australian small businesses have been devastated by the COVID-19 health and economic crisis and prompt payment times are critical to business survival.
Ultimately, if small businesses were paid on time the whole economy benefits, therefore legislation requiring small and medium sized enterprises to be paid in 30 days enforces meaningful cultural change in business payment performance across the economy.
The reporting framework will require big businesses to be up front and honest about the time it takes to pay their suppliers. The information reported is required to be easily accessible and integrate.
It also welcomes some choice for small businesses around who they engage and supply their goods to.
The Australian Small Business and Family Enterprise vows to monitor and investigate reports of big businesses failing to satisfy the information provided on the register once implemented.
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