Recently granted royal assent in July 2023, the Business Payment Practices Act will mandate that businesses meeting the Scheme's revenue and payment threshold must publicly disclose their payment practices from June 2024.
The Business Payment Practice Act aims to enhance transparency in B2B payment practices, to enable members of the public and entities to access information about those payment practices so that they can make informed choices about whether to engage with certain large entities.
Understanding the purpose of the Business Payment Practices Act
The Business Payment Practices Act won't mandate that suppliers be paid within a certain period. Rather, its objective is to foster transparency in large businesses' payment practices and encourage prompt payments to suppliers.
The submissions will be made publicly available and this open register is expected to:
- incentivise large businesses to pay their suppliers on time; and
- eventually lead to improved payment times, as large entities transition toward best practice standards.
Determining your reporting obligations
The Business Payment Practices Act will mandate 'large entities' that satisfy the Scheme's payment threshold to provide bi-annual disclosures to the Registrar.
- An entity meets the payment threshold if the total expenditure (excluding wages, salaries and intragroup payments exceeds $10 million in each of their previous two accounting periods.
- For the first disclosure period, only entities whose total revenue (including its subsidiaries) exceeds $100 million are required to disclose.
- Thereafter, an entity qualifies as 'large' if in each of their last two accounting periods, the combined total revenue of the entity and its subsidiaries exceeds $33 million.
Immediate actions to consider
Stay informed
Keep abreast of updates and further guidance from your KPMG team to stay compliant with any future changes to the Act.
Build a cross-functional team
BPP will require a diverse group within your business from accounts payable, procurement, internal risk and senior leadership.
Implement reporting procedures
Ensure your current systems are collecting the key data points and can produce raw data outputs with the correct reporting fields.
The Business Payment Practices Regulator's potential to impose significant penalties for non-compliance, coupled with the heightened interest from stakeholders due to public reporting, underscores both the financial and reputational risks linked with the Business Payment Practices Scheme.
In navigating the evolving landscape, understanding your reporting obligations is paramount. Partner with KPMG's seasoned specialists to ensure seamless compliance with the Business Payment Practices Act. Our expertise empowers your business for accurate and timely disclosures, safeguarding against risks and maximising benefits.
Contact us today to embark on a confident path forward.
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