Payment times see limited improvement ahead of overhaul to rules
The latest payment times data reveals a minor reduction in average payment times but a significant portion of large businesses are continuing to make slow payments.
Payment times to small businesses again saw only a minor improvement in the latest report from the Payment Times Reporting Regulator with the regulator still concerned by the amount of reporting entities still making slow payments.
The report for Reporting Cycle 6, the period between 1 July 2023 and 31 December 2023 indicated that 36 per cent of reporting entities are still making 95 per cent or more of their small business payments more than 60 days late.
Since the beginning of payment times reporting, there has only been an increase of 5.8 percentage points in the average proportion of payments occurring within 30 days.
The average proportion of payments occurring within 30 days was 69.2 per cent for the latest reporting cycle.
The latest data also revealed that only 21.4 per cent of entities make 95 per cent or more of their payments to small business suppliers within 30 days. This is a small improvement from 17.3 per cent in the very first reporting cycle.
Reporting entities improved the average payment terms offered to small businesses to 35.2 days for reporting cycle 6, marking a reduction of 1.9 days from the 37.1 day average reported in reporting cycle 1.
The average payment terms varied significantly across industries, ranging from 26.6 days in Public Administration and Safety to 44 days for the manufacturing industry.
The regulator warned that all entities with obligations under the Act must take their obligations seriously.
"Reporting entities that fail to submit reports within the required period may face compliance and enforcement action by the regulator," it said.
The Regulator said it will soon be implementing significant changes to the Payment Times Reporting Scheme following the passage of the Payment Times Reporting Amendment Act 2024.
This major overhaul to the regime it said will help to enhance the quality of payment times data and provide a more accurate representation of the payment times and practices of large businesses by introducing consolidated reporting and new reporting measures.
"We will introduce the reforms from the Amendment Act starting on 7 September 2024, with new reporting requirements applying to all periods beginning on or after 1 July 2024," it said.
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