The Federal Parliament passed the Payment Times Reporting Bill 2020 earlier this week.
Under the new laws, a payment times reporting scheme will be introduced, requiring businesses with a total annual income of over $100 million to report on how and when they pay their small-business suppliers.
The bill defined small business as those that have a turnover of less than $10 million, which covers 99 per cent of all businesses.
ASBFEO Kate Carnell said that while she supports the Payment Times Reporting Scheme as passed by the Senate, she also noted that Labor’s “failsafe mechanism” amendment would have strengthened the bill.
“The proposed failsafe mechanism would have allowed the regulator to force big businesses to pay their small-business suppliers in 30 days or face hefty fines, but the amendment was unsuccessful,” Ms Carnell said.
“In reality, the Payment Times Reporting Scheme is a step in the right direction, but it won’t solve the problem of late payment times on its own.
“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy.”
Despite the amendment not being passed, Ms Carnell said the bill represents important progress at a time when it is critical small businesses are paid promptly.
“Australian small businesses have been hit hard by the COVID crisis, so getting paid on time is key to their survival,” Ms Carnell said.
“Importantly, the legislation introduced today will apply to around 3,000 Australian large businesses, including foreign companies that carry on an enterprise in Australia along with certain government enterprises.
“My office will be invoking the powers we have to investigate any reports of big businesses failing to live up to the information provided on this register once it is implemented.”
Commenting on the bill, Minister for Employment, Skills, Small and Family Business, Senator Michaelia Cash said the measure would support small businesses, especially through COVID-19 challenges.
“Late payments have a significant impact on small-business cash flow and inhibit the ability of a firm to invest, grow and employ,” Ms Cash said.
“Shining a light on large business payment performance will lead to fairer and faster payments for Australia’s 3.5 million small and family businesses. Bad payers won’t be able to hide, as this scheme will expose their poor practices.”