Payment Times Procurement Connected Policy aids government suppliers
Suppliers of government contracts are expected to receive better payment times thanks to the new Payment Times Procurement Connected Policy.
The new policy aims to improve payment times and cash flow across the Australian economy. With it, businesses with an annual income of more than $100 million and are awarded government contracts of over $4 million will be required to pay suppliers’ invoices within 20 calendar days.
Failure to pay the invoices under the new policy will leave businesses facing interest penalties.
The change complements the Government’s policy to pay its suppliers on time. The policy is also in line with the commitment to give small businesses greater confidence in cash flow.
Large businesses will also be required to report their payment terms and practices under the Payment Times Reporting Scheme, increasing transparency of payment times from large to small suppliers.
Minister for Employment, Workforce, Skills, Small and Family Business Stuart Robert said the policy would help improve the payment times for suppliers in the supply chains of government contracts of up to one hundred government agencies.
“Late payments are a significant issue in Australia and it’s an issue that disproportionately impacts smaller businesses. Dealing with it is in all our interests and improving payment times will help these businesses prosper, grow and employ more Australians,” Minister Robert said.
“The Federal Government is leading by example in paying contracts up to $1 million quickly, as we should and we are now setting that standard for large businesses that receive Commonwealth contracts.”
Minister for Finance Simon Birmingham said that increasing SME representation in government contracts allows government agencies to directly engage SMEs for the procurement of goods and services valued up to $200,000.
“This will reduce red tape for SMEs and deliver value for money for the Commonwealth,” Minister Birmingham said.
The Payment Times Procurement Connected Policy Guidelines are now available online. The guidelines will assist large businesses and government agencies to understand their rights and responsibilities under the policy.
The Payment Times Procurement Connected Policy will be fully implemented from 1 October 2021.