The Payment Times Reporting Scheme was introduced in January 2021 and requires large businesses and certain government enterprises with an annual taxable income of more than $100m to publicly report on their payment terms and times to small business suppliers.
Over 72,000 reports have been submitted to the Payment Times Reporting Regulator to date.
To help large businesses prepare for their next submission period, KPMG's observations about the Payment Times Reporting Scheme provide business leaders with key actions to consider.
Payment Times Reporting compliance is mandatory
Learn how KPMG can help large businesses comply with their 6-monthly Payment Times Reporting obligations.
What is the purpose of the Payment Times Reporting Scheme?
The Payment Times Reporting Scheme does not mandate that small businesses be paid within a certain period, rather it aims to promote transparency over large businesses’ payment practices and encourages timely payment to small business suppliers.
The publicly available Payment Times Reporting register contains information relevant to the Scheme for all reporting entities and includes, among other things, the reporting entity’s payment terms, its aggregated payment performance against pre-set benchmarks, and the use of supply chain financing.
Perceived benefits of the public register
- Small businesses can make more informed decisions about potential customers
- Public transparency on payment practices may incentivise large businesses to pay small businesses on time
- Improved payment times as large businesses move to best practice standards
The hefty penalties that can be imposed upon contravention of the Scheme, together with the Regulator’s ability to publicly ‘name and shame’ non-compliant reporting entities, highlight both the financial and reputational risks associated with the Payment Times Reporting Scheme.
Who must report under the Payment Times Reporting Scheme?
The implications of being a reporting entity under the Payment Times Reporting Scheme are significant due to the bi-annual payment data reporting requirements. This will consequently require time, effort and resources to comply with successfully.
Whilst there is complexity associated with the definition of a reporting entity, a summary of the key tests are outlined.
A constitutionally covered entity becomes a reporting entity if it:
- carries on a business in Australia or has either its central management and control in Australia, or its voting power controlled by shareholders who are residents of Australia
- is not a registered charity with the Australian Charities and Not-for-profits Commission
- for its most recent financial year the entity’s consolidated revenue was more than $100 million
- the entity is not controlled by another entity that is a reporting entity.
The determination of a reporting entity under the Amendment Act is complex and there may be various fact patterns which could exclude an entity from reporting.
To explore your obligation to report under the Payment Times Reporting Scheme, contact KPMG for a confidential discussion.
Immediate actions to consider for Payment Times Reporting
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We recommend businesses begin preparing for their submissions as early as possible to ensure there is ample time to seek the appropriate sign offs from key stakeholders.
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With the Regulator’s ability to audit submissions, it is important to ensure that the necessary workpapers are retained in the event of a Payment Times Reporting Regulator audit.
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Recent updates to guidance material will likely impact organisations with even the most robust Payment Times Reporting processes. Therefore, it is important to be aware of the latest changes to the guidance and ensure your process appropriately reflects these changes.
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Large, complex groups often contend with multiple ERP systems. Reporting entities will need to consider how they will feed their data into standardised fields for the purposes of preparing their Payment Times Reporting submission.
Payment Times Reporting services and support
KPMG’s Payment Times Reporting specialists provide support for large businesses, including targeted advice as well as a fully outsourced metrics calculation service. To learn more about your obligations under the Payment Times Reporting Act or receive assistance with PTR compliance, contact us for a confidential discussion.
