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CA ANZ and CPA Australia have said there has been little improvement in actual payment times and the government should consider non-regulatory avenues such as e-invoicing instead.
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SMEs still unaware of payment times regime, government told
13 May 2024
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Many small and medium businesses are still unaware of the government’s payment times reporting regime, top accounting bodies say, with the reporting burden imposed on larger businesses outweighing any benefits it has on smaller suppliers.
In a joint submission to the Treasury in response to proposed reforms to the Payment Times Reporting Act, CA ANZ and CPA Australia said the government should consider non-regulatory avenues such as e-invoicing instead.
“As a part of our continued engagement with members from small to medium sized business, many are still unaware that this reporting regime exists let alone the regime’s intent to improve payment times for their sector,” the submission said.
“To date, there has been little improvement in actual payment times. Therefore, currently the reporting burden borne by entities outweighs any benefits for small businesses.”
The submission comes after the reporting regulator’s update in January showed average payment terms were down just 1.7 days since 2021 when the regime came into effect, and the number of invoices paid within 30 days increased by 3 per cent.
An independent review of the Payment Times Reporting Act last August also slammed the government’s scheme as “unwieldy”.
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The report, by economist and former Labor MP Craig Emerson, also found data produced by the reporting scheme was “impenetrable”, limiting media coverage and reputational pressure on late payers.
CA ANZ and CPA Australia said the “continued lack of public awareness of the act, particularly [among] small to medium sized businesses” meant the government needed to dedicate reform efforts to informing businesses of its existence.
“We encourage the regulator to continue to provide transparent public information in relation to payment trends and improvements in payment behaviour to illustrate the effectiveness of the framework,” their submission added.
The country’s two largest accounting bodies also took issue with the proposed ministerial discretion to give a “slow small business payer direction”.
The submission said the inclusion “undermined” the regulator’s role and could unfairly penalise reporting entities beyond the period of the ministerial discretion if the direction remained on the register even after ceasing in effect.
“We encourage the government to consider developments in other jurisdictions,” the submission said, citing the New Zealand government’s focus on increasing e-invoicing adoption and repealing its equivalent business payment times regulation this year.
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