Navigating Australia's Payment Times Reporting Scheme

What is the Payment Times Reporting Scheme?

The Payment Times Reporting Scheme (PTRS) is a federal government initiative established under the Payment Times Reporting Act 2020. Its primary objective is to make payment performance information publicly available, creating transparency around how quickly large businesses pay their small business suppliers.

This transparency is intended to incentivise improved payment practices, fostering a fairer environment for small businesses. The scheme covers a significant portion of the Australian economy, impacting both reporting entities and their small business supply chains.

Who needs to report under the PTRS?

The obligation to report under the PTRS applies to specific types of entities based on their size and structure. Understanding these criteria is critical for determining whether your organisation has reporting duties.

• Large Businesses: Generally, a business is a 'reporting entity' if it carries on an enterprise in Australia and its total income for the last income year was more than an aggregated annual turnover of $100 million. This threshold applies to the entire group of companies if the business is part of one.
• Government Entities: Commonwealth corporate entities and Commonwealth companies may also be required to report if they meet certain income thresholds.
• Not-for-profit Entities: The scheme can also apply to not-for-profit organisations if they meet the income threshold.

The scheme specifically targets payments made to 'small business suppliers', which are defined as businesses with an annual turnover of less than $10 million. It is important to correctly identify these suppliers for accurate reporting.

What information must be reported?

Reporting entities are required to submit detailed information about their payment practices. This includes both the terms on which they pay their small business suppliers and their actual performance against those terms.

1. Standard Payment Terms: Details of the usual payment terms offered to small business suppliers, including the shortest, longest, and standard payment periods.
2. Actual Payment Performance: A breakdown of the proportion of small business invoices paid within different timeframes, typically within 30 days, between 31-60 days, between 61-90 days, and more than 90 days. This also includes the proportion of the total value of invoices paid within these timeframes.
3. Payment Dispute Information: Data related to payment disputes with small business suppliers.
4. Supplier Finance Arrangements: Information on any supply chain finance arrangements offered to small business suppliers.
5. Early Payment Discounts: Details of any early payment discounts offered.

Reports are submitted twice a year, covering six-month reporting periods (1 January to 30 June, and 1 July to 31 December). Each report must be lodged within three months of the end of the reporting period. The Payment Times Reporting Regulator manages the scheme and publishes submitted reports on its website, making the data publicly accessible.

Key steps for compliance with the PTRS

Meeting your obligations under the Payment Times Reporting Scheme requires a structured approach to data collection, analysis, and submission. Proactive management of these processes can prevent compliance issues.

• Identify Small Business Suppliers: Implement a robust process for accurately identifying small business suppliers within your vendor master data. This often involves annual verification or reliance on supplier declarations.
• Review Contractual Terms: Ensure your standard business contracts with small business suppliers clearly state payment terms and align with your reporting capabilities. Consider whether your standard payment terms are reasonable.
• Implement Data Collection Systems: Establish or refine internal systems to accurately track invoice receipt dates, payment due dates, and actual payment dates for all small business supplier invoices. This data is fundamental to generating accurate reports.
• Automate Reporting Processes: Where possible, automate the aggregation and analysis of payment data to streamline report generation and minimise manual errors. Accounting and enterprise resource planning (ERP) systems often have features or integrations to assist with this.
• Regular Reporting: Ensure reports are prepared and submitted to the Payment Times Reporting Regulator within the stipulated three-month deadline following each six-month reporting period.
• Internal Review and Audit: Periodically review your payment processes and reporting data to ensure accuracy and consistency. Consider internal audits to confirm compliance.

Non-compliance with the PTRS can lead to significant penalties, including infringement notices and civil penalties. The Regulator may also publish details of non-compliant entities, which can impact reputation.