Submission to Payment Times Reporting Rules amendments
20 August 2024
The Business Council of Australia (BCA) welcomes the opportunity to provide feedback on the Payment Times Reporting Rules amendments. The BCA has supported the overarching reforms to improve the Payment Times Reporting Scheme (PTRS), but the proposed draft Rules are unnecessarily prescriptive in some areas, such that they will increase compliance costs while not necessarily helping to improve payment terms, times and practices. These planned changes will add to an already heavy regulatory and reporting burden for businesses.
BCA member companies support the payment times reporting framework to improve transparency of payment times to small business. The PTRS complements the voluntary commitments to fast payment through the BCA’s Australian Supplier Payment Code (ASPC). The ASPC is an industry-led voluntary commitment to pay small business suppliers within 30 days and on time, with over 150 signatories.
Small businesses play a critical role in their communities and across supply chains. That success relies on invoices being paid quickly, in full and on time. The PTRS should be able to shine a positive light on large businesses that are paying small businesses promptly. It puts companies that are unfairly extending payment times to small business suppliers under the spotlight and puts pressure on those businesses to change their practices. Central to this is simple, accessible, and useful data, which in turn can also reduce compliance costs.
The evidence is clear – payment terms and practices have improved over the past three years. This has come at a time of enormous disruption, including natural disasters, the COVID-19 pandemic, lockdowns/restrictions, supply constraints, logistics challenges, delivery delays, weak growth in the economy, record high job vacancies, and elevated staff turnover. Having payment practices and performance data in the public domain has encouraged many businesses to seek to improve through strong reputational incentives to improve payment times in response.
The proposed changes to reporting methods and data will unnecessarily involve significant and costly changes to systems that may not align with the objectives of the Payment Times Reporting Act 2020. In particular, it is unclear how some of the proposed changes would help improve payment times or practices. Companies have undertaken significant investments to meet their reporting obligations under the previous regime but many of these systems will now need to be rebuilt given the prescriptive approach to some aspects of the rules. At the same time, there must be adequate time for businesses to prepare for any new reporting regime.
The focus of the rules should be on what companies report, while guidance material from the Payment Times Reporting Regulator should support the how. In this context, reforms should allow companies the flexibility to continue to rely on existing systems and processes as much as possible where they produce the required outcomes. Payment times reporting is ultimately the mechanism through which the objective of better payment terms, times and practices for small business suppliers are to be achieved. This must be the overarching perspective against which any proposed changes are assessed. The BCA submission to the consultation on the Payment Times Reporting Act 2020 primary legislation amendments called for any changes to follow best practice principles to ensure the proposed changes meet the policy intent at least cost.