Financial management

Are YOU being paid on time? With this new report, you can check how your biggest customers are performing.

- February 10, 2022 3 MIN READ
payment times stack of bills on a spike representing overdue payments

It’s now just over one year since Australia’s biggest companies had to “fess up” and publicly declare how long it takes them to pay their small suppliers. So what’s changed for business owners? asks Bronwyn Reid.

Long payment terms and late payment of invoices have been a source of constant irritation (anger?) for small business owners and managers for a very long time. It has taken years of lobbying to reach this point of at least some transparency.

The Payment Times Register

Australian companies with a turnover greater than$100m now have to lodge a report with the Federal Government every six months. Each company has to report it’s Shortest, Standard (Default), and Longest Payment Terms to their small suppliers.

The first compulsory reporting period closed on 30 June 2021 and the results were published on 30 November 2021. So now we can see the real figures, and no longer have to rely on occasional surveys and anecdotal evidence.

They have to declare what percentage of invoices were paid in the following time brackets:

  • Less than 20 days
  • 21 – 30 days
  • 31 – 60 days
  • 61 – 90 days
  • 91 – 120 days
  • More than 120 days.

(That’s not all they have to report on, but these are the important parts).

6413 large businesses lodged a report.

One-third of invoices are still being paid late …

I have presented the data from just one company below.

payment times

The way the data is presented makes it impossible to tell how many invoices were paid after their official due date. But without that information, I’m going to make a (very reasonable) assumption; any invoice paid after 30 days is “late”. In other words, even if the payment terms are longer than 30 days, they shouldn’t be.

Using this assumption, just over one-third of invoices are still being paid late.

… so there is still a long way to go.

Clearly, there is room for improvement as we pursue the 30-day payment target for all small businesses.

I used the data from the report to create this graph. It shows the breakdown of payment times reported. The story it tells is that just over half of Australia’s big companies still have payment terms greater than 30 days for their small suppliers.

paymengt times

The graph also tells us that there are still companies that have official payment terms of over 120 days. Incredibly, 11 of these were over one year. Imagine waiting a whole year to get paid!

What use is this report to you?

Now that we have this valuable information available to us every 6 months, we can use it as valuable business intelligence.

I know very well the excitement of being contacted by a very large company about the possibility of winning some work with them. But there’s a lot to think through before you leap in and sign the contract…

If you have not dealt with that company before, you won’t know if they are good payers, or one of those that is going to make you wait a whole year for your money. Now you can simply open the Payment Times Register online and search for your prospective client. The report is in spreadsheet format, so searching is as simple as a quick Excel search. In seconds you will be able to see their track record, and use that information to help make your decision, or negotiate better terms before the contract starts.

How to read the numbers

To illustrate how the report numbers can be used, I have chosen an example. That example company’s statistics are in the table that I included earlier on in this article.

This company seems to be doing quite well. Its shortest terms are 30 days, but it is paying almost half (46.9 per cent) its invoices in under 20 days.

As another example, I found a company that needs to sharpen up.  This company’s longest payment terms are 15 days (admirable!), but only about half (56.3 per cent) of its invoices are being paid in that time period or slightly longer.

Now that you know where and how to look for this payment information, you are well-armed with the knowledge you need to make your decision.

Now we all need to watch out for the second report to see if there is any improvement.

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Now read this:

6 tips for dealing with late payments from trusted clients

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