Commonwealth adopts new procurement payment policy, encourages states to do the same

By Shannon Jenkins

Thursday November 7, 2019

Minister for Finance and the Public Service Mathias Cormann and Prime Minister Scott Morrison. Image: Flickr user G20 Argentina.

Commonwealth government agencies will soon be expected to pay e-Invoices to suppliers within five days, or else pay interest on late payments.

Starting from January 1, the new payment policy will apply to agencies that deliver and receive invoices electronically with suppliers, for contracts worth up to $1 million. However, the current maximum 20-day payment term for instances where e‑Invoicing is not used will still be valid.

The Department of Finance and Services Australia will be the first Commonwealth agencies to accept e-Invoices, with other agencies following suit over the course of the year, according to Finance Minister Mathias Cormann and Michaelia Cash, Minister for Employment, Skills, Small and Family Business.

They say the new system will speed up payment times and deliver “significant benefits and efficiencies” to suppliers and agencies by reducing transaction costs and handling errors.

“Having a standardised framework enables buyers and suppliers to transact using e-Invoices even if they have different software,” they said.

There are some exceptions from the new policy. For example, it will not apply to agencies that procure goods and services overseas, procure real property, or procure from a Commonwealth entity. It also won’t be enforced if an administered appropriation is funding the procurement, or if the payment has come from a non-procurement arrangement, such as a grant. 

The government passed legislation allowing Australia to implement the Pan-European Public Procurement On-Line (PEPPOL) framework — an internationally-recognised framework for e-Invoicing — last month, but it has been on the cards for a while.

The federal government initially expressed interest in e-invoicing in the 2016 federal budget. Prime Minister Scott Morrison and New Zealand Prime Minister Jacinda Ardern met up earlier this year to establish an electronic invoicing board — ANZEIB — to “set the direction of how e-Invoicing will be rolled out over the next few years”.

Cormann and Cash said adopting e-Invoicing across the Commonwealth would be prioritised.

“We encourage state governments and the business community to follow our lead using the new framework for e-Invoicing,” they said.

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