The Morrison Government is supporting millions of small businesses by helping to ensure they get paid on time.
Legislation to implement the Payment Times Reporting Scheme was passed by the Senate today, which will put every big business on notice.
Under the scheme, large businesses and applicable government enterprises with a total annual income of over $100 million will have to report publicly on how and when they pay their small business suppliers. This scheme will provide unprecedented transparency and will show Australians how big businesses pay their suppliers.
This transparency will help small businesses make more informed decisions about who they do business with, and the general public can make better decisions about the large businesses they purchase from.
We have already seen large companies change their practices following adverse media coverage. Recently, businesses such as Rio Tinto and Telstra rapidly abandoned payment practices which negatively impacted on small businesses once they were subject to public exposure. As a result, their payment policies were shortened to ensure suppliers were paid within 20 days.
Minister for Employment, Skills, Small and Family Business, Senator the Hon 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,” Minister 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”.
Minister Cash said the Government had developed this legislation following extensive consultations with industry associations and representatives of small and large business since early 2019. Their feedback has directly informed the design and operation of the scheme.
The Coalition Government has a strong record when it comes to ensuring small and family businesses get paid on time.
Since July 2019, Commonwealth agencies have paid invoices for contracts up to $1 million within 20 calendar days or paid interest on any late payments.
This captures approximately 95 per cent of procurement contracts entered into by the Commonwealth.
The scheme will begin on 1 January 2021.
View full media release here.