Commonwealth agencies now have to pay lower-value bills within 20 days

By Stephen Easton

Tuesday July 2, 2019

Starting this week Commonwealth agencies are expected to pay invoices worth less than $1 million within 20 days rather than 30 as the previous rules required.

Minister for Finance Mathias Cormann and Minister for Small and Family Business Michaelia Cash promised on Monday that small and family businesses would see their bills paid according to the new terms from now on. They confirmed the government was working towards enforcing a similar rule for its large suppliers, with respect to their smaller sub-contractors.

Each year, the Department of Jobs and Small Business runs a survey of government agencies and reports on their performance against the standard. In 2017-18, almost 97% of lower-value contracts were paid within the 30-day terms that applied at the time, up from about 82% in 2002.

“A report from Xero last month found that half of all payments from big to small businesses were late, totalling more than $115 billion a year,” said the joint ministerial statement.

“It is clear big business needs to do more to pay contracts on time and we will also continue to look at ways in improving this delay. The Government is working to require large businesses tendering for Commonwealth contracts to match the 20-day payment terms.

“Also in development is an annual reporting framework requiring large businesses with over $100 million turnover to publish information on how they pay small businesses.”

The Morrison government has repeatedly committed to have 35% of all federal contracts worth up to $20 million go to small and medium-sized businesses, up from 10%, but it’s not clear when they aim to reach the target.

Meanwhile, the new Payment Times Reporting Framework is under development and will introduce new obligations to discourage tardy payments in the private sector, although it might apply to the public sector as well in the interest of consistency.

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