In January 2021, the Australian Government introduced new legislation that affects large businesses which engage small business suppliers. Find out how this affects your business.
The legislation requires certain entities to produce bi-yearly reports detailing how long they take to pay small business vendors. This information will then be shared publicly to help small business owners make informed decisions about who they choose to work with.
The Payment Times Reporting Scheme is also designed to encourage large businesses to improve their payment terms and practices.
The new scheme affects Commonwealth entities and Australian enterprises with an annual income above $100 million (or over $10 million if the enterprise is part of a corporation with a combined income over $100 million). Businesses that don’t meet these requirements can also choose to report voluntarily, as increased transparency will give quality vendors more confidence in providing their services.
Many businesses now have a limited window (before September 30, 2021) to submit their first payment times reports.
A new Small Business Identification Tool has been developed to help entities determine which of their vendors are classified as a small business and must be included in their reporting.
Entities that supply inaccurate data, don’t keep proper records, or fail to submit their reports will face penalties.
The new scheme will be overseen by the Payment Times Reporting Regulator who is responsible for enforcement and managing the Payment Times Reports Register. This is a publicly available register that will display the reported data from businesses.
Non-compliance will also be published so it's important for reporting entities to meet the requirements under the scheme.
The initial difficulty for businesses that have not yet implemented effective accounts payable solutions will be gaining the visibility needed to produce accurate reports.
Traditional accounts payable methods (such as spreadsheets and emails) are often highly siloed, making it very hard to achieve a bird’s eye view of AP performance.
Another key challenge will be driving improvements in payment processing times to avoid reputational damage from having poor results displayed publicly. Quality suppliers who are already highly selective about who they will work with may come to rely on the register as a way to avoid poor performers entirely.
Currently, the stats on payment processing times for businesses that have not implemented effective accounts payable solutions are quite alarming. For example, a study by Ardent Partners and Canon found the average time to process a single invoice is more than 8 days!
With many small business vendors requiring 7- or 14-day terms, it would be near impossible for these businesses to achieve it.
Finance leaders who are committed to improving process times and ensuring compliance may be concerned that there is not enough time to design and deploy a fit-for-purpose solution that solves these challenges, at least not before the first reporting deadline of September 30, 2021.
Luckily, smart technology not only provides an answer to the challenges associated with meeting the requirements of the scheme – it also provides a solution to the need for rapid deployment.
Powered by advanced technology, AP automation is able to:
✓ Capture data in any format (PDF, paper, email, electronic)
✓ Automatically extract data with near perfect accuracy
✓ Validate invoices to mitigate fraud, remove duplicates, match to purchase orders and approved suppliers, realise early discounts, and avoid payment penalties
✓ Direct invoices through to the correct approvers in line with financial authorities
✓ Pay and report to drive improved visibility and control
From a compliance perspective, increased visibility plus faster processing times and detailed reporting make AP automation the ultimate solution to meeting the requirements of the scheme.
It will also enable businesses to stand out in the public domain for their efficiency and corporate responsibility and care when dealing with small businesses.
The results speak for themselves, with a large utility company successfully deploying AP automation to decrease workload in the department by 60% plus complete elimination of manual errors.
Try our online ROI calculator, based on results from our customers you can see how much time and money your AP team would save, and ultimately gain a huge increase in efficiency.
A large energy company used AP automation to manage several manual invoice processing tasks and is now saving over $15,000 and 760 hours of employee time every month.
At Converga, we are proud to offer an AP automation solution with rapid deployment and complete customisation capabilities to meet your business’s needs.
Enjoy massively reduced payment times, with invoices received available for approval within a service level 24 hours from receipt.
Our solution has a guaranteed 98.5% minimum data accuracy, with a full return on investment achievable via:
• elimination of manual errors
• decreased cost to process invoices
• prevention of late payment fees
• a huge reduction in man hours
Our solution is industry leading, cloud-based, zero footprint and e-Invoice ready.
Bring Business Process Automation to your Accounts Payable function.
You can get started today by doing a quick online ROI assessment to see how much time and money your Accounts Payable department could be saving.
It’s AP, but pain-free!
To speak with an AP automation expert about compliance with the Payment Times Reporting Scheme, simply contact us.