Payment Times Reporting Solutions

What is the Payment Times Reporting Scheme?

The Payment Times Reporting Scheme (PTRS) is an Australian legal requirement obligating large businesses and government enterprises with over $100 million in annual revenue to biannually report their payment terms and practices regarding small business suppliers. It aims to improve cash flow for small businesses by increasing transparency via a public register.

Who needs to submit a Payment Times Report?

An entity that is a constitutionally covered entity, carries on a business in Australia and has consolidated revenue greater than $100 million will have an obligation to report under the Payment Times Reporting Scheme.

Once an entity becomes a reporting entity, it must continue reporting until it notifies the Regulator that it has met the criteria to cease being a reporting entity. 

When did the Payment Times Reporting Scheme commence?

The Payment Times Reporting Act 2020 commenced from 1 January 2021 and was Amended to the Payment Times Reporting Act 2024 from 1 July 2024. The Acts remain active, and eligible entities may have an obligation to report under both Acts.

What are the key changes introduced by the Payment Times Reporting Amendment Act 2024?

Reforms to the Scheme were enacted under the Payment Times Reporting Amendment Act 2024 and apply to reporting periods from 1 July 2024. The Amendment Act overhauls the Payment Times Reporting Act 2020 and introduces significant changes to the content of reports and requirements for entities subject to the scheme.

Businesses should be aware that under these changes:

• Groups will now be required to assess their requirement to report by identifying if their consolidated accounting revenue exceeds $100 million.
• Groups will be required to produce one consolidated payment times report every 6 months, instead of the entity-by-entity approach under the Payment Times Reporting Act 2020.
• The slowest 20% of small business payers may be identified as a ‘slow business payer’ and forced to publish this designation on their website and other documentation.
• A list of ‘fast small business payers’ (who pay 95% of small business suppliers in 20 days or less) may be published by the Regulator.

As outlined above, the changes introduced by the Payment Times Reporting Amendment Act 2024 are significant and will have numerous implications for reporting for all reporting entities. In essence, the reporting outputs under the original Payment Times Reporting Act 2020 will not be sufficient to comply with the new requirements imposed by the Amendment Act.

Whilst the breadth of changes needed to reporting is extensive, some of the initial areas to start considering include the following:

• Groups that have been reporting as multiple entities should take time to understand the Amendment Act, and the changes that will be required to their Payment Times Report disclosures and preparation activities.
• Groups which have foreign controlled entities should review whether these foreign entities should be included when assessing the $100 million threshold, and whether the payment data of controlled foreign entities needs to be included or excluded from the consolidated Payment Times Report.
• Reporting entities should review their current ERP systems and PTRS data points to understand what additional information is required (especially from new entities within the Group) and the accuracy of this information.
• Reporting entities should begin to assess their current position against the slowest 20% of small business payers in their ANZSIC division, and understand what improvements are required to their supplier contracting and payment practices if they are at risk of receiving a small business payer direction.

This will support the preparation of the payment times report in line with the Amendment Act and the latest Regulator’s guidance, and that businesses are ready in the event of any review or audit by the Regulator.

Navigating the complexities of the Payment Times Reporting legislation can be challenging for entities subject to the Scheme. KPMG offers a range of time-saving options to help you gain a better understanding of your obligations and support you on your ongoing PTRS journey.

Why does Payment Times Reporting remain challenging for many organisations?

Payment Times Reporting continues to present challenges for many organisations due to:

• legislative complexity across two Acts and evolving regulator guidance significant changes introduced by the Payment Times Reporting Amendment Act 2024
• consolidated group reporting requirements replacing entity-by-entity reporting
•  highly prescriptive and technical metric definitions
• manual data extraction often across multiple ERPs and systems
• increased scrutiny through public disclosure
• PTR Regulator scrutiny including regulator audits and significant financial penalties for the provision of late or misleading metrics.

Who is a small business supplier?

Under the Scheme, an entity is defined as a small business if it carries on an enterprise in Australia and for its most recent income year its total income was less than $10 million.

To provide clarity in this area, the Regulator launched its Small Business Identification Tool (SBI tool) in 2021 when the Scheme first commenced. The SBI tool remains in use following reforms to the Scheme and continues to apply under the Amendment Act, enabling reporting entities to determine which of their suppliers are considered a ‘small business’.

What are the key metrics included in a Payment Times Report?

The Scheme requires reporting entities to prepare and disclose a wide range of information in relation to their payment practices to their small business suppliers. Key data points required for disclosure under the Amendment Act include:

• shortest, standard most common (mode) and longest payment terms offered to small business suppliers for the Group
• estimated standard payment term for the Group’s next reporting period
• whether the standard receivable term is shorter, longer, or the same as the mode payment term to small business suppliers
• average and median payment times to small business suppliers for the Group
• 80th and 95th percentile values for payment time to small business suppliers for the Group
• percentage of small business invoices paid within agreed payment terms
• percentage of small business supplier invoices paid within specified date ranges
• percentage by total value of procurement by the reporting entity in the reporting period that was from small business suppliers
• proportion of small business payments that used Peppol-enabled systems
• additional information to provide context to disclosures.

Where can I find the latest PTRS guidance material and instructions?

The most up-to-date Payment Times Reporting guidance materials, templates, and compliance instructions are available on the official Payment Times Reporting Scheme website. We have also included some useful links below:

• visit the Payment Times Reports Register
• understand the Small Business Identification Tool
• view the Payment Times Reporting Guidance Material.

When is a Payment Times Report due?

Reporting entities must submit two reports per year, each covering a 6-month period based on their financial year. The following examples are for reporting entities that have a standard 12-month financial year:

• For a financial year ending on 30 June, reporting periods are 1 July–31 December (due 31 March) and 1 January–30 June (due 30 September).
• For a financial year ending on 30 September, reporting periods are 1 October–31 March (due 30 June) and 1 April–30 September (due 31 December).

How do I lodge a Payment Times Report?

The Payment Times Report must be lodged via the PTR Portal Payment Times Reporting Portal | Treasury.gov.au. Only entities that have correctly registered with the PTR Portal will be able to lodge a report.

Who is the Payment Times Reporting Regulator?

The Payment Times Reporting Regulator is an Australian Government official based within the Treasury who administers the Payment Times Reporting Scheme. Currently led by Regulator Ms Robyn Beutel, the office monitors and enforces compliance with the Payment Times Reporting Scheme, focusing on the reporting behaviour of large businesses regarding their small business suppliers.

What are the penalties for non-compliance under the Payment Times Reporting Scheme?

The Regulator holds extensive enforcement and compliance powers. These powers include but are not limited to the following:

• Where a reporting entity fails to report, the maximum potential penalty for incorporated entities is 300 penalty units.
• Where a reporting entity submits a false or misleading report, the maximum penalty is up to 0.6% of total income for the entity’s most recent income year.

The Regulator also holds the power to issue civil penalties when a reporting entity fails to comply or reasonably assist with a compliance audit or where a reporting entity fails to retain records.

What should I do if I receive a notice of non-compliance from the Payment Times Reporting Regulator?

If you receive a notice of non-compliance from the Payment Times Reporting Regulator, you must take immediate action. The Regulator can issue non-compliance letters, publicly name non-compliant businesses, and impose infringement notices. Failure to act can lead to financial penalties and reputational damage. Our Payment Times Reporting specialists can assess your situation and help you respond to the Regulator effectively and in a timely manner.

What should I do if my business receives an audit notice from the Payment Times Reporting Regulator?

If your business receives an audit notice from the Payment Times Reporting Regulator, take immediate action to review the requirements, as failure to comply can lead to penalties. You must provide the appointed auditor with necessary access, pay for the audit costs, and consider seeking legal or accounting assistance to manage compliance and potential penalties.

Immediate steps to take

• Assess the notice: Determine if your business is indeed a ‘reporting entity’ (a constitutionally covered entity meeting income thresholds) and ensure all required reports are identified.
• Cooperate with the auditor: Provide reasonable facilities, access, and assistance to the auditor appointed to review your Payment Times Reports.
• Prepare documentation: Gather all relevant payment data and records to support the accuracy of your submitted reports.
• Engage experts: Consider engaging specialists, such as those from KPMG to handle the audit process.

What is the definition of a Slow Small Business Payer?

A Slow Small Business Payer is identified based on the reporting entity’s 95th percentile payment time to small business suppliers compared to other reporting entities; overall and within their ANZSIC division.

A reporting entity qualifies as a Slow Small Business Payer if:

• the reporting entity ranks in the slowest 20% of Small Business Payers during a reporting cycle, or
• the reporting entity ranks in the slowest 20% of Small Business Payers within its ANZSIC division during a reporting cycle.

Reporting entities with a 95th percentile payment time of 30 days or less cannot be classified as a Slow Small Business Payer. The Minister can issue a direction if an entity qualifies as a Slow Small Business Payer for two consecutive reporting cycles.

What should I do if my business is identified as a Slow Small Business Payer?

If your business is identified as a Slow Small Business Payer under the Australian Payment Times Reporting Scheme, it means your payment times to small business suppliers are among the slowest 20% in your industry. The Minister for Small Business can direct you to publish this status on your website and in other documentation. 

Immediate steps to take:

1. Address compliance and reporting requirements.
2. Improve internal payment processes.
3. Manage reputation and supplier relationships.

What is the definition of a Fast Small Business Payer?

A Fast Small Business Payer is identified from the 95th percentile payment time reported in submissions. An entity qualifies as a Fast Small Business Payer if for 2 consecutive reporting periods, it has a payment time of 20 days or less.

A designation as a Fast Small Business Payer automatically expires 9 months after the end of the reporting period in which the entity qualified unless the entity continues to submit a report with payment times of 20 days or less.

How can my business improve payment times to small businesses without impacting our working capital performance?

For organisations subject to Payment Times Reporting, reducing supplier payment terms for small businesses can create additional cash flow pressure. In our experience, this can be easily offset – and often exceeded – by optimising the rest of business working capital for cash flow improvement.

By improving collections, reducing excess inventory, strengthening forecasting and embedding stronger working capital disciplines, many organisations are able to improve overall cash flow while meeting payment time obligations and supporting small business suppliers.

KPMG helps CFOs balance compliance with Payment Times Reporting requirements while delivering sustainable cash flow improvement across the broader business. Learn more about our Working Capital services.

Does any software offer automated Payment Times Reporting features?

Whilst we have seen many ERP software solutions offer automated Payment Times Reporting modules, in our experience we have often seen many of these incorrectly calculate metrics. We believe this is due to the complexity of the Act and Guidance, in addition to the numerous rounds of changes that have been made. It is also important to note that most businesses have unique processes and data nuances, and these often require a more tailored approach to understanding how PTR applies to those attributes.

What services can support my business to complete a Payment Times Report?

KPMG’s Payment Times Reporting specialists provide a range of support from targeted advice through to a fully outsourced metrics calculation service. To find out more about your obligations under the Payment Times Reporting Scheme or receive assistance with PTR compliance, contact us for an initial discussion.