Section 57A of the Payment Times Reporting Act 2020 (the Act) requires an independent review of the operation of the Act.
Scope of the Review
The Review must consider the matters prescribed in section 57B of the Act.
These are whether:
- The operation of the Act is meeting the objects set out in section 3:
- to provide for large businesses, certain government entities and volunteering entities to report information on their payment terms and practices in relation to their small business suppliers.
- to make that information publicly available in order to: enable small businesses to make more informed decisions about potential customers; and create incentives for reporting entities to improve their payment terms and practices.
- Related government policies, including policies relating to electronic invoicing, have improved the payment terms and performance of reporting entities in relation to their small business suppliers.
- Other measures, such as mandating one or more maximum payment periods (the mandated maximum payment periods) for the payment of small business invoices by reporting entities would be more effective in improving those payment terms and practices.
Further, in considering mandated maximum payment periods, section 57B of the Act requires the review must consider:
- How mandated maximum payment periods could best be implemented, taking into account potential regulatory burdens on reporting entities and the need to avoid unintended consequences for small businesses.
- The mandated maximum payment periods that would be appropriate to improve payment terms and practices, including whether mandated maximum payment periods of 30 days, 20 days, or 10 days or less would be appropriate, and whether mandated maximum payment periods of 5 days would be appropriate if electronic invoicing were used.
- The impact of sector or industry‑specific differences, including how mandated maximum payment periods could be imposed on sectors and industries with differing payment terms and practices.
- The compliance or enforcement arrangements that would be appropriate to support mandated maximum payment periods, including whether a penalty regime should be established for the following purposes:
- To require a reporting entity to pay small business invoices issued to the entity within a specified period, if the entity has a median payment period for small business invoices issued to the entity that is longer than the mandated maximum payment period.
- To require a reporting entity that has failed to pay a small business invoice issued to the entity within the period specified in the terms of the relevant contract to pay interest on that payment.
Beyond the matters set out in section 57B of the Act, the Review should consider the efficacy of international approaches, including the model adopted in the United Kingdom, and make recommendations on arrangements that will ensure small businesses are paid on time.
The Review will include a public consultation period.