Unprecedented: SME payment times regulator names and shames late reporters

Australia’s payment times watchdog has quietly named and shamed the parent company of Regional Express and other ASX-listed giants for failing to comply with its data collection rules.

The Payment Times Reporting Scheme, which launched in early 2021, requires many major companies to share data about their payments to small business suppliers.

That data is provided to policymakers and is presented on a public dashboard, encouraging big businesses to speed up their payments to smaller suppliers.

For the first time since the scheme’s launch, Payment Times Reporting Regulator Mary Jeffries used a December register update to list seven companies that fell short of reporting requirements.

They include Regional Express Holdings Limited, serviced office provider Servcorp Limited, insurer NobleOak Life Limited, financial services company Centrepoint Alliance Limited, Alumina Limited, Qantm Intellectual Property Limited, and Ashley Services Group Limited.

The information is nestled in the third page of a spreadsheet listed on the regulator’s website.

Being pinged for ‘Failure to Comply’ does not necessarily mean a company failed to pay its small business suppliers on time; rather, they did not provide payment data to the regulator three months after the end of a reporting period.

It may not be the last time major corporate entities are singled out for sluggish reporting, Jeffries said in the regulator’s January update, published Wednesday.

“I will continue to use my regulatory powers to improve compliance outcomes where necessary,” she said.

Government commits to “level playing field” for SMEs

The decision to publish those company names comes during an inflection point for the regulator.

Esteemed economist and former Minister for Small Business Craig Emerson handed down a statutory review of the Payment Times Reporting Act 2020 last year, recommending a suite of changes intended to boost its efficacy.

The federal government last year accepted all 14 recommendations of that review — including its focus on exerting “reputational pressure on large businesses” that delay payments to SME suppliers.

It has also committed to making it easier for reporting entities to file their payment time data to the regulator.

Jeffries said industry consultation will begin in the coming months, with the goal of developing “industry standards and frameworks that can support the promotion of good payment times”.

Canberra has directed $8.1 million in funding to the task, effectively pledging to make the legislation, and the Payment Times Reporting Regulator, more potent weapons against delayed payments.

“The new initiatives we have committed to will help to level the playing field to ensure small businesses are paid on time,” Small Business Minister Julie Collins said in response to Wednesday’s update from the regulator.

“This is a matter of fairness – big businesses should not take advantage of Australia’s 2.5 million small businesses by failing to pay them on time.

“I look forward to continuing work this year to deliver more action on payment times for small business.”

Average payment times improve, slightly

Aside from the first-ever ‘Failure to Comply’ notices, the January update brought some positive news on payment time improvement.

Average payment terms of reporting entities were 35.4 days in June 2023, the regulator said, a 5% improvement since January 2021.

The proportion of invoices paid within 30 days has also increased to 67.2%, a 2.7% increase since launch.

There are also slight improvements in the construction industry, where many small businesses are faced with extraordinary cashflow pressures and sit on the brink of insolvency.

Average standard payment terms in construction fell from 38.8 days to 38.0 days between January 2021 and June 2023, the report says.

However, payments in the sector still take considerably longer than the all-industry average of 35.4 days.

“While this new data is welcome our Government understands more work is required to ensure small businesses are paid on time,” Collins said.