The Morrison Government is backing the 3.4 million small businesses that underpin Australia’s economy through new legislation to ensure they are paid on time.
Public consultation opens today on the draft Payment Times Reporting Framework legislation that will require businesses with over $100 million turnover to publish information on how fast they pay small businesses.
Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash said, the new Framework is essential to encourage fairer and faster payments for small and family businesses.
“Slow or deliberately delayed payment times have a significant impact on small business cash flow and viability. This will be a landmark reform which will encourage fairer and faster payment times for small businesses,” Minister Cash said.
“Big businesses pay their small business suppliers late more than 50 per cent of the time. There is simply no excuse for that.”
Once implemented, the scheme will require Australian businesses with an annual turnover of $100 million or more to report how quickly they say they pay and when they actually pay their small business suppliers.
The Payment Times Reporting Framework is a landmark reform that will increase transparency on big business payment performance and help small business choose who they supply. This is an important step in driving cultural change in business payment performance across the entire economy.
The scheme is essential to freeing up cash flow and ensuring small businesses thrive.
“Australian small businesses should be able to expect a fair go and I encourage all big businesses to commit to paying on time. We have already seen positive changes, with some big businesses recently taking steps to reduce their payment times. This is encouraging and reflects how businesses behaviour is directly influenced by community expectation.
“The Government has already changed its payment system, to make sure small businesses receive payment for government contracts under $1 million within 20 days.”
The Payment Times Reporting Framework legislation will cover approximately 2,500 of Australia’s large businesses, including foreign companies and government entities.
The legislation has been developed following extensive consultation in 2019 with business, industry organisations and representatives of small and large business.
Consultation on the draft legislation is open until 6 March 2020 at https://consult.industry.gov.au/