Ten questions to consider when preparing your Payment Times Report

Thomas Jones
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Recent compliance action from the Payment Times Reporting Regulator – the first such action since the PTR Act commenced three years ago – has highlighted the importance for organisations to ensure that they are meeting reporting obligations.

The most recent version of the Payment Times Reporting (‘PTR’) Register, published in December 2023, included ‘Failure to comply’ notices for organisations determined by the Regulator to be non-compliant with reporting obligations.

In a news article published on the PTR website, the Regulator indicated these notices, which include the name of the non-compliant entity and details of the non-compliance, ‘may remain on the Register even after the non-compliance is remediated.’

Below, we have compiled a list of ten key questions for preparers and approvers of payment times reports, to consider ahead of the next submission.

1. When did you last check for any updates to the guidance material published by the Regulator? 

The guidance materials are regularly updated and re-issued by the Regulator to provide reporting entities with a better understanding of the expected treatment of various invoice payments (e.g., invoices paid via credit cards), and clearer instructions on filling in the reporting template.

2. If your organisation is a Controlling Corporation, are you confident that all entities exceeding the relevant income threshold are reporting?

Member entities of a corporate group that were not considered reporting entities at the start of the PTR scheme (i.e., their annual income was less than $10m), may have exceeded the income threshold in subsequent financial years, and may therefore be required to prepare reports.

3. When did you last run your supplier ABN listing through the Small Business Identification (‘SBI’) tool?

Inconsistent, infrequent, or selective use of the SBI tool is not in line with the expectations of the Regulator and may result in reports being misleading or incomplete. The SBI tool is a key reference tool in the PTR regime as it contains the ABN of businesses identified as small businesses for the purpose of reporting. As it is regularly maintained and updated, organisations who inconsistently, infrequently or selectively use the SBI tool run the risk of reports being inaccurate or incomplete, and contradicts the expectations of the Regulator.

4. How comfortable are you that the payment terms being reported are representative of your organisation’s small business payment practices? 

If your organisation has specific payment terms for small businesses, this section of the reporting template may be straightforward to complete. However, if your organisation does not have specific payment terms for small businesses, the process for determining what payment terms to report is more involved and may risk misrepresenting your organisation’s payment practices if not prepared in accordance with the Regulator’s requirements.

5. Are you only reporting on invoices that are paid under trade credit arrangements, and excluding all non-reportable payments (e.g., prepayments)? 

The inclusion of invoices paid under non-trade credit arrangements may materially impact the payment times reported.

6. Have you captured relevant credit card payments?

Supplier invoices under trade credit arrangements that are paid via credit card must also be included in payment times calculations.

7. Have you adjusted (where applicable) invoices that are partially paid during the reporting period, or invoices paid in instalments?

Invoices that have been partially paid or paid in instalments may require additional attention to ensure accuracy of reporting, and to comply with the Regulator’s requirements.

8. Has anything materially impacted on your organisation’s ability to pay small business invoices during the reporting period? 

Reporting entities are encouraged to include in the specified reporting field any additional information that will provide users with further context or explanation for the information contained in the report.

9. What quality assurance has been performed on the organisation’s payment times report, prior to submitting to the principal governing body for approval?

It is considered better practice to conduct and record quality assurance activities prior to report submission, to ensure the report provides an accurate representation of the organisation’s payment times and practices.

The penalty free period is over. Payment Times Reporting just got more real.
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10. In reviewing your payment times report, has there been a reduction from the previous reporting period, in the average time taken to pay small business invoices?

In December 2022, the Australian Government announced an independent review of the PTR Act to consider whether the scheme in its current form was meeting its objectives. The outcome of the review, published in August 2023, suggested that the primary purpose of the PTR scheme should change from being focused on providing small businesses with greater transparency, to applying more pressure on large businesses to improve payment times and practices. 

The review further emphasised that the purpose of making the reported information publicly available is to exert reputational pressure on large businesses. With each cycle of reporting, it is expected there will be a greater focus on how organisations are working to improve the timeframe, with which they pay their small business suppliers.

We’re here to help

If you have any concerns about the accuracy of the information included in your reporting, your compliance with the numerous reporting obligations, or if you would like our help to conduct a quality assurance review on your PTR preparation and submission processes, please get in touch.

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