As the government begins its post-COVID crackdown on compliance activities, it's a good time to talk about the Payment Times Reporting Scheme (PTRS) and what it means for you.

The Payment Times Reporting Act 2020 came into effect on 1 January 2021, with compliance and enforcement powers commencing on 1 January 2022. The purpose of the scheme is to give small businesses an insight into how large businesses deal with smaller suppliers and how they manage payments to them, helping small businesses make informed decisions.

It requires businesses with income greater than $100m to report biannually on how they deal with small business suppliers, including reports on standard payment terms, invoices paid on time, supply chain financing arrangements, etc. These reports are periodically uploaded to the publicly accessible Payment Times Reporting Register (linked here) where they can be accessed online at the click of a button. As a result, there are significant reputational and civil penalty risks for non-compliant entities.

What does this mean for small businesses?

The Payment Times Reporting Register is a useful tool for small businesses supplying goods or services to large corporate groups, as it will provide comfort to small business operators prior to engaging larger groups in long-term contracts, as well as metrics to support estimates for cash flow forecasting purposes.

What does this mean for reporting entities?

Reporting entities are required to lodge a Payment Times twice a year.

The report must contain:

  • The entity's name and ABN;
  • A description of the entity's main business activity;
  • A statement on the standard payment periods at the start of the reporting period (needs to include the shortest and longest);
  • Explanation of any changes to the standard payment periods during the reporting period;
  • The proportion of small businesses paid within the following periods of time from the issue date of the invoice, by total number and total value:
    • Within 20 days
    • Between 21-30 days
    • Between 31-60 days
    • Between 61-90 days
    • Between 91-120 days
    • More than 120 days; and
  • The proportion of invoices that were small business invoices.

The Payment Times Reporting Portal contains a Small Business Identification Tool that can be used to identify relevant small businesses for PTRS purposes.

Failing to report carries a civil penalty of 300 penalty units. There is also a material civil penalty for up to 0.2% of income if recordkeeping requirements are not met.

If the Payment Times Reporting Regulator is satisfied that an entity has failed to comply with the act, the regulator may publish the identity of the entity and the details of their failure to comply either on the register or in any other way the regulator sees fit.

Who is a reporting entity?

As per the Act, an entity is required to report under the PTRS if any of the following apply to it:

  • Turnover of the entity exceeds $100m in an income year;
  • If the entity is a controlling corporation; turnover of the entity's group exceeds $100m in an income year; or
  • If the entity is a member entity of a controlling corporation's group; turnover of the member entity exceeds $10m in an income year.

How can we assist with Payment Times Reporting?

From our experience with the scheme and our clients, we know these changes can be complicated. We support our clients by helping them understand the scheme, understanding their accounting systems and producing information necessary for compliance with the scheme. We can provide advice and guidance on which entities are required to report, as well as prepare reports for lodgement.

If you are interested in any of these services or have any questions, do not hesitate to contact Jason Chute from our offices.