What is in a report

This includes the name of the responsible member who approved the report and the date the report was signed as approved.  

The responsible member is an individual member of the entity’s principal governing body who is authorised to sign the payment times report. For example, if the entity is:

• a constitutional corporation – a member of the principal governing body (for example, the board) who has the company’s express or implied authority to sign the report on behalf of the company
• a partnership – a partner with authority to act on behalf of the partnership
• a superannuation fund – the trustee, which may be an individual or a corporation (the same as that of the constitutional corporation)
• a trust – the trustee, which may be an individual or a corporation (the same as that of the constitutional corporation)
• a sole trader – they are the responsible member
• under administration – the administrator is the responsible member.

A person acting for a responsible member under a Company Power of Attorney or similar delegation, may also sign a payment times report.

It's a reporting entity’s responsibility to ensure a report is signed by someone who is, or is formally acting as, a responsible member. Whether a delegation satisfies the requirements of a responsible member depends on the terms of the reporting entity’s delegation arrangements.

A responsible member of a controlling corporation can also be the signatory for the payment times reports of the entire group of member entities.

A report must be signed off using the responsible member template available at the portal. See How to report.

Where a person is acting for a responsible member under a Company Power of Attorney or similar delegation, they must state this arrangement next to their position title in the responsible member template.

Electronic signatures are acceptable and should identify the signatory in a reliable manner (see the Electronic Transactions Act 1999). The signature may be an image of an individual’s handwritten signature, a digital signature, or a typed name accompanied by the word ‘signed’.

Personal information about the responsible member provided in a payment times report won't be made publicly available.

This includes the name of the principal governing body of the entity.

The principal governing body is the body, or group of members of the entity, with primary responsibility for the governance of the entity. For example, if the entity is:

• a constitutional corporation – the board
• a partnership – the partners
• a trust or superannuation fund – the trustee, which can be an individual or corporation. If it's a corporation, it's the board.

A responsible member of the entity must declare that they will provide the report to the principal governing body of the reporting entity. This must include the date it will be provided.

This declaration is made using the responsible member template available from the portal. See How to report for more information.

It's best practice to provide the payment times report to the entity’s principal governing body at the earliest opportunity. This is generally before the next payment times report is due.

Entities must report:

• the standard payment period they offer to small business suppliers (at the beginning of the reporting period)
• the shortest and the longest standard payment periods offered to their small business suppliers
• any changes made to these periods during the reporting period (at the end of the reporting period).

This gives small businesses transparency on how quickly they might be paid if they contract with a reporting entity. There are no penalties under the scheme for not paying suppliers in the agreed payment periods.

The supply payment period is when the payment is required to be paid, disregarding any supply chain finance arrangements.

Standard payment periods may be in a written contract or verbally agreed with the small business supplier. When a business buys goods or services from another business, both parties generally enter into (or act under) a contract that includes payment terms. This contract or agreement is intended to be legally binding.

The standard payment period is the supply payment period on offer for inclusion in the entity’s contracts with small business suppliers. That is, what an entity would offer small business suppliers if they were to contract them as at the beginning of the reporting period. 

If there's no single standard payment period on offer, it's the payment period most commonly included or the majority period used in the entity’s contracts with small business suppliers (in existing contracts). I there aren't any existing contracts, it's the standard payment period most commonly included in previous contracts.

The ‘most commonly included’ supply payment period is based on the number of contracts entered into with small businesses suppliers, not the value of contracts entered into.

In other cases, there may be no longest or shortest standard payment period on offer – there may only be a single standard payment period. In this case, the standard payment period is also the longest and shortest standard payment period.

If the standard payment period on offer is a date range or period, this must be reported as the highest number of calendar days in the date range or period. For example, a standard payment period of 30 to 60 days is reported as 60 days. Similarly, a standard payment period of ‘payable within 30 days of the end of the month’ is reported as 61 days.

Standard payment periods example

Entity X offers 3 payment periods to its small business suppliers (per the contract) in its first reporting period:

• perishable goods: payment terms of 15 calendar days
• long life goods: payment terms of 20 calendar days
• repair services: payment terms of 30 calendar days.

Most of the entity’s contracts are with small business suppliers that supply long life goods. They want to improve the payment terms for small businesses halfway through the reporting period. To do this, the entity changes all its payment terms for long life goods. It changes it to 15 calendar days with all its active contracts with small business suppliers.

The entity would report the following standard payment periods in its payment times report. It would also include an explanation for the changes in their standard payment terms:

• standard payment period = 15 calendar days
• shortest payment period = 15 calendar days
• longest payment period = 30 calendar days.

The standard payment period changed from 20 calendar days to 15 calendar days during the reporting period.

The proportion, determined by total number and total value, of small business invoices paid by the entity during the reporting period in each of the following:

• within 20 days after the issue day
• 21 to 30 days after the issue day
• 31 to 60 days after the issue day
• 61 to 90 days after the issue day
• 91 to 120 days after the issue day
• more than 120 days after the issue day.

The proportion, by total number and total value, of small business invoices paid by the reporting entity needs to be reported, in aggregate, against each of these day bands. These proportions should be expressed as a percentage.

Days refer to calendar days. For example, weekends and public holidays must be included in these day bands.

Issue day refers to when the invoice was received.

The total proportion (by value) of invoice payments during the reporting period that was from Australian small business suppliers. The entity must provide data on the total proportion of all invoice payments during the reporting period that was from small business suppliers compared to all invoices paid.

For example, if an entity paid $50 million in small business invoices and paid $200 million invoices in total the proportion reported as a percentage is 25%.

To calculate the proportion of invoices paid, a reporting entity that is a member of a controlling corporation should exclude invoices from any business that is also a member entity of their group. This includes invoices from small businesses who are a member of the same group.

Invoices from small businesses that are part of another controlling corporation or group or identified by the Small Business Identification tool are included.

A reporting entity should also refer to invoices that are paid for the supply of goods and services under a trade credit arrangement in calculating their total procurement. This includes invoice payments for good and services made outside Australia.

Invoice payments that relate to the procurement of the following may also be excluded:

• Payments which do not have trade credit arrangements. For example, payments for rental leases that are pre-paid and travel expenses (including airfares, hotels, taxi, etc.) and restaurant or cafe expenses.
• Payments related to employees, whether through payroll or through reimbursements.

To calculate the value of invoices paid using foreign currency, entities may use the 'Foreign exchange rates Translation (conversion) to Australian dollars – foreign currency exchange rates to use' guidance available on the ATO’s website.

As the value of a foreign currency invoice (in Australian dollars) is determined at the time of payment, the payment date should be used to determine the value. This will be the amount in Australian dollars that forms part of the total proportion (by value) of business procurement.

Details of the use of supply chain finance including whether the entity offers these arrangements for small business suppliers. If used, report the proportion (by value and number) of small business invoices paid under these arrangements during the reporting period. This includes information on any benefits the entity received from providers of those arrangements.

For the purpose of the scheme, supply chain financing is defined as any arrangement in which a reporting entity undertakes or agrees to pay a small business invoice before the agreed supply period, in exchange for the small business accepting a discount on the payment. The payment could be made by the reporting entity or through a third party.

Supply chain financing is also known as settlement discounts, reverse factoring or dynamic discounting. For example, it can include:

• settlement discounts, where a supplier offers a reporting entity a discount in exchange for early payment
• dynamic discounts, where a reporting entity offers and funds early payment in exchange for a discount, typically after an invoice has been received
• reverse factoring, where a reporting entity offers a supplier early payment in exchange for a discount, with early payment funded by a third party.

It can involve:

• a third-party financier
• a broker
• direct negotiation between the large business and the small business supplier.

The entity must provide details of any supply chain finance that is provided or used with their small business suppliers. These include:

• details and a description of the type(s) of supply chain finance
• a statement of the proportion, determined by total number and total value, of small business invoices paid using these arrangements
• details of whether a small business is required to sign up to use supply chain financing to receive payment or be eligible to supply to a reporting entity
• whether the reporting entity receives any benefit, such as payment or commission, from providing supply chain finance. This relates only to benefits provided by third party providers of supply chain finance.

To calculate the value of invoices paid through supply chain finance, the actual amount shown on the invoice should be used. This is disregarding any discount that may be subsequently applied in the payment to the small business supplier. This is because the invoice represents the obligation for an entity to make a payment. If the discounted amount is what is invoiced then this will be the relevant amount.

Details of any practices or arrangements under which small business invoices must be provided to the entity.

The entity must report whether or not they have arrangements for accepting invoices. For example:

• only accepting invoices on certain days of the month or at the end of the month
• requiring a total amount to be spent before an invoice will be paid
• imposing arrangements for progress payments
• making payments dependent on the entity selling the goods or services provided by the small business.

Entities are not required to report on the extent that these arrangements are used.

Details of any practices or arrangements where a small business is required to pay an amount to participate in the entity’s procurement processes.

This could include a subscription or membership fee, payments to lodge a tender, or to lodge an invoice for payment.

Details of any notifiable event that has occurred since the last payment times report.

Notifiable events include:

• changes to an entity’s accounting period for income tax purposes
• changes to their business name as registered on the business names register
• where a reporting entity is member of a controlling corporation’s group and its income falls below $10 million for two income years and will cease to be a reporting entity.

Any additional information to provide context or explanation in relation to the information provided in the report.

The entity can include any additional information to explain the information provided in the report. As the reports will be publicly available, entities should ensure the information would not raise any concerns.

The Regulator will not publish information that is commercially sensitive or includes personal information.