Only invoices and arrangements where there is a trade credit arrangement should be reported on where appropriate in Payment times reports.
A trade credit arrangement is where a large business and a small business supplier agree that payment by the large business for goods and services is to be delayed to a time after the supply.
Entities that don’t receive any goods or services
A reporting entity may not receive goods or services from small business suppliers. Therefore, it does not make any payments to small business suppliers in a reporting period. They would still need to complete a Payment times report including nil values where applicable
Items to report
Entity name and ABN
Entity’s controlling corporation name and ABN
Entity’s head entity name and ABN
Entity’s primary industry
The primary industry of the entity is based on the ATO’s Business industry codes. This is the entity’s primary, or main business activity. For example:
- if the majority of employees work in one section of the organisation, the day-to-day duties of this section would be the main activity
- if the majority of income is generated by a particular industry then this would be the main activity
Where the entity operates in multiple industries, they should report the code that best describes their main business activity. For example, if 60% of employees work in one section of the business, the day-to-day duties of this section would be the main activity.
This is the period the report relates to.
Details of the person who submitted the report
This includes the person’s name, role, phone number and email address.
This personal information will not be made publicly available.
Approver of the 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. If the entity is:
- a trust administered by a sole trustee, that trustee is the responsible member
- a sole trader, that individual is the responsible member
- under administration, the administrator is the responsible member
For example, if the entity is a:
- Constitutional corporation: a member of the principal governing body (e.g. the Board) who has the company’s express or implied authority to sign the report on behalf of the company
- Partnership: a partner of the partnership with authority to act on behalf of the partnership
- Superannuation fund: the trustee, which may be an individual or a corporation (the same as that of the constitutional corporation)
- Trust: the trustee, which may be an individual or a corporation (the same as that of the constitutional corporation)
A responsible member of a controlling corporation can be the signatory for the Payment times reports of the entire group of member entities.
This personal information about the responsible member will not be made publicly available.
Entity’s governing body
Details like 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:
- constitutional corporation: the board
- partnership: the partners
- superannuation fund: the trustee (which can be an individual or corporation, if it is a corporation, then it would be the board)
- trust: the trustee
A declaration by a responsible member
The responsible member of the entity must declare that they will provide the report to the principal governing body. This must include the date it will be provided.
It is best practice that the Payment times report is provided to the entity’s principal governing body at the earliest available opportunity. This is generally before the next Payment times report is due.
The standard payment period
This includes the shortest and longest standard payment periods that the entity offers to its small business supplier (at the beginning of the reporting period).
The entity must also report any changes to these periods during the reporting period.
There are no penalties under the scheme for not paying small business suppliers within a large business’s standard payment periods.
The standard payment period is the supply payment period on offer for inclusion in the entity’s contracts with small business suppliers.
The supply payment period is when the payment is required to be paid disregarding any supply chain finance arrangements.
In some cases there is no supply payment period on offer. In this case, it is the supply payment period most commonly included in the entity’s contracts with small business suppliers.
The shortest and longest standard payment periods refer to the shortest and longest standard payment periods, offered to small business suppliers.
Standard payment periods can be found in a contract that is:
- partly written
- partly oral
A contract may be defined as an agreement between two or more parties. It is intended to be legally binding. When a business buys goods or services from another business, both parties generally enter into (or act under) a contract that includes payment terms.
Standard payment periods example
Entity X offers three 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
The majority of the entity’s contracts are with its 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 = 20 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 halfway through the reporting period.
Small business invoices paid
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
- 21-30 days after the issue day
- 31-60 days after the issue day
- 61-90 days after the issue day
- 91-120 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.
Small Business procurement
The total proportion (by value) of business procurement 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 would be $50 million of $200 million as a percentage which equals 25%.
Use of supply chain finance
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.
The entity must provide any details of 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 original value of the invoice should be used rather than the discounted value.
Small business invoices
Details of any 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 like:
- accepting invoices only 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.
Small business practices or arrangements
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. To determine whether to publish this information, the Regulator will assess if the information is commercially sensitive or includes personal information.