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Legislation to improve payment times for small businesses has passed the Parliament, in a move to ensure invoices are paid within 30 days.
The Payment Times Reporting Amendment Bill 2024 has officially passed, after the Senate agreed to amendments put forward by the Coalition.
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The bill overhauls the Payment Times Reporting Act 2020 and aims to “provide a shot in the arm for small businesses” as faster payment times can help improve cash flow.
The updates also aim to alleviate administrative burdens, remove inefficiencies in the Act, and help streamline processes for businesses (thereby reducing financing costs).
The legislation also ensures the Payment Times Reporting Regulator has the appropriate tools to deliver better payment outcomes for small businesses.
After amendments were accepted in the Senate on Wednesday (3 July), the bill passed.
The amendments were for the regulator to maintain and publish a list of fast small-business payers on the Payment Times Reports Register, which will recognise the larger entities that are paying small businesses in 20 days or less. It also increases pressure on big businesses to improve payment times by highlighting the worst payment performers.
According to data provided by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), the majority of payments made to small-business suppliers are late (49 per cent are paid after 30 days).
The bill therefore aims to ensure SMEs are paid on time and prevent bigger businesses from using their market power to obtain a cash flow advantage over small-business suppliers.
Speaking in the Senate on Wednesday, senator Paul Scarr said while the changes in the original bill will help shine a light on those who are slow to pay small businesses, it is important to also recognise the businesses that are paying small businesses within appropriate time frames.
“Extending payment times for suppliers, effectively uses the businesses in the supply chain as a cheap form of finance,” said Scarr.
“In effect, the big business, the customer, is using the [small business] as a means to finance their working capital. It really is unacceptable in this day and age.
“This is an important issue and these are important reforms.”
The Minister for Small Business Julie Collins MP said: “The passage of this legislation in the Parliament is a big win for Australia’s small businesses. Being paid on time is a matter of fairness for Australia’s small businesses which is why we haven’t wasted any time passing this legislation after introducing it to the Parliament.
“I’m pleased the Parliament has backed these important reforms. Improving payment times for small businesses was an election commitment, and [this] passage shows we’re delivering.”
[Related: Over 80% of businesses experienced late payments: CreditorWatch]
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