Scholarships for directors
AICD Board Diversity Scholarships have been chosen as one of 60 projects selected as part of the federal government’s Women’s Leadership and Development Program (WLDP). Running from 2021–24, the scholarships will advance the number of women on Australian boards, with a particular focus on representation in rural and regional communities.
The WLDP will deliver AICD’s Board Diversity Scholarships to enable women to gain transformative governance skills and education through the Company Directors Course. The program also offers scholarships to facilitate the participation of women in the AICD’s Foundations of Directorship course.
Announcing the grants, Minister for Women Marise Payne said: “These projects are estimated to benefit around 40,000 Australian women nationwide, including women from diverse backgrounds and those at high risk of long-term unemployment”.
More information at aicd.com.au/education/scholarships
The introduction of the Payment Times Reporting Scheme (PTRS) on 1 January means an Australian business with a turnover of more than $100m must publicly disclose its payment practices with small business suppliers (suppliers with less than $10m turnover).
It is expected this increased transparency will invite public scrutiny and encourage fairer payment behaviours, influence the way large businesses interact with smaller ones, and allow small businesses to make more informed choices about who they do business with. AlphaBeta analysis in 2019 of over 10 million invoices from more than 76,000 small businesses estimated the quantum of long payments by large business is $77b per year. More than a third of small business invoices are paid after 30 days and take an average of 63 days to be paid. This was estimated to equate to $7b in working capital transferred from small to large business every year.
The goal of the legislation is to help Australian small businesses improve their cashflow by shifting the working capital burden back to larger businesses. The legislation carries financial penalties on the reporting entity of up to $66,600 a day for failure to report and other severe penalties for reporting inaccurately.
Concern will vary across organisations depending on the robustness of current systems and resources to allow timely and accurate reporting, as well as the working capital and therefore, cashflow impact of reducing payment times.
Reporting entities are required to lodge reports twice yearly and within three months of each reporting period. The first report is due on 30 September for 30 June year balance dates.
How to navigate the new rules
Directors must ensure their reporting processes are centralised so the reported metrics are consistent across the organisation. Companies that have decentralised processes for receiving and approving supplier invoices, for instance, may find these new requirements burdensome as they must now report the time from receipt of invoice to payment. Directors will want assurance that their company’s payment data is complete and accurate, before signing off on figures they aren’t necessarily used to scrutinising. New systems such as e-invoicing have the potential to streamline PTRS reporting.
- Reporting entities are required to lodge reports twice yearly and within three months of each reporting period. The first reports on payment times for the period 1 January to 30 June 2021 will be due by 30 September 2021.
- The new scheme responds to investigations by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) in 2019–20, which showed some large companies were pushing out payments to their small business suppliers from 30 to 60 days up to six months.
- In March 2020, ASBFEO released its final Supply Chain Financing Review, which highlighted the impacts of delayed payments to suppliers on the cashflow and viability of many small businesses and, in turn, the overall health of the Australian economy.
Most companies regularly monitor the time it takes to pay suppliers, commonly referred to as days payable outstanding (DPO). This internal metric looks at payment time frames as an average across all suppliers and there has been no obligation on businesses to publicly disclose DPO until now. As this is the first time Australian organisations are required to report on their payment times, it would be helpful to seek professional advice when navigating the detail of the legislation. If in doubt, ask for help.
Take advantage of working capital levers
A reduction in payment times may help a business’ reputation, but it will come at a cost. Not only will new payment and reporting processes cost money, but in order to offset the cash impact of paying small suppliers faster, companies will need to speed up their own debt collection by reducing days of sales outstanding (DSO) and/or reducing their inventory holdings. Both actions require a concerted and well-planned program to achieve results without negatively impacting the business (see industry.gov.au/regulations-and-standards/payment-times-reporting-scheme). Jason Ireland is a partner at specialist advisory McGrathNichol.
“The legislation carries financial penalties on the reporting entity of up to $66,600 a day for failure to report.”
Australians hide part of their identity at work
Research published by employer job seeking platform Indeed — Workplace diversity and inclusion a year into COVID-19 — has revealed a substantial disconnect between the perceived and lived reality of minority groups in Australian workplaces. Jay Munro, senior country marketing manager Australia and NZ at Indeed, says the research shows COVID-19 has negatively impacted corporate Australia’s management of diversity and inclusion.
Of the 62% who hide their identity at work:
- 18% hide their religion
- 17% hide their age
- 15% hide their culture
- 14% hide their disability
- 12% hide their sexual orientation
- 8% hide their ethnicity
This survey was conducted by YouGov 11–17 February 2021, surveying 2060 working age Australians (18–64) currently in either full or part-time employment, or actively looking for work.
“Employers therefore have significant work to do in creating safe, diverse and inclusive environments in which all employees feel comfortable to be their true selves at work,” he says. “In a truly diverse and inclusive work environment, all employees are encouraged to speak openly and contribute fully, and as a result team morale, job satisfaction and productivity increases.”
A byproduct of 2021’s work conditions is that 62 per cent of Australians conceal part of their identity while at work — almost a quarter hide their identity “in fear of criticism”, the research finds.
Job insecurity has been a major contributor to workplace stress and anxiety since COVID-19 began, with 51 per cent of Australians reporting health and wellbeing issues. Minorities felt this acutely — of the nine per cent of Australians who feel the pandemic has worsened their organisation’s diversity and inclusion management, 19 per cent were First Nations people and 15 per cent from minority backgrounds.
60% of LGBTIQ+ workers hide their sexual orientation at work
59% of workers with disability don’t always feel open about their disability
35% of working Australians whose first language isn’t English report not feeling heard at work
However, Australians with disability who reported feeling they are treated equally at work increased from 65 per cent in 2020 to 75 per cent in 2021.
There were pronounced shifts for LGBTIQ+ workers, 62 per cent reporting they have experienced stress/anxiety over the past year, compared to the 51 per cent of the rest of the working population. And 49 per cent of LGBTIQ+ people say they have felt increasingly lonely over the past year.
Climate change governance guide
In August, AICD will release a guide for directors on the governance of climate change risks and opportunities. More information will be available at aicd.com.au