Payment Times Reporting

Certain major companies are required to report on their payment habits for small business suppliers every two years under the Payment Times Reporting Scheme. The Regulator then releases this information. The plan’s objective is to utilize public pressure and reputation to persuade companies to modify their payment methods, which the government feels could jeopardize small businesses’ ability to maintain their financial stability. The “reporting entities”—companies, foreign corporations, and specific partnerships and trusts—that are subject to the scheme’s reporting requirements must operate in Australia, have a total annual revenue of over $100 million, and not be registered charities.

For corporate groups with total income over $100 million, both the controlling corporation (also known as the “head entity”) and any other reporting entities within the group that have total income of at least $10 million must report. The information that reporting entities must disclose includes their payment times and payment terms with small business suppliers.

The Payment Times Report (PTR) is a tool used to gather more about a company’s payment policies and practices with Australian small companies. Data on payment terms provided to small businesses, the proportion of small business invoices paid within predetermined time frames following date of receipt, the proportion of purchases made from small business suppliers, and any supply chain financing provided to small businesses are all included in the PTR. For PTR reasons, a firm must operate in Australia and have a turnover of less than AUD $10 million in order to qualify as a small business.

The PTR carries stiff penalties for non-compliance, including a fine of 0.6% of annual turnover (a $500 million company, for instance, may be hit with a $3 million charge for each failure). Before it can be filed, the PTR needs to be approved by a board member.