Turnbull Government paying 60% of its small business invoices within 20 days, report shows

Invoice paid

Federal Government agencies are paying 96% of their small business contractors within thirty days of receiving an invoice, according to a new report.

Minister for Small Business, Michael McCormack said the latest Pay On-Time report also found agencies were paying 60% of invoices up to $1 million within 20 days, and that the overall results were a “great outcome” for the 6,800 small businesses with government contracts.

“The Government is leading the way for payment culture in Australia and this is a marked improvement from 2002 when only 82% of invoices were paid on time,” he said.

The Government’s current ‘pay on time’ policy requires its agencies to pay invoices for contracts worth up to $1 million within 30 calendar days; however, Minister McCormack recently announced that from 1 July 2019, it will be mandatory for small businesses to receive payment from Government within 20 calendar days.

The revised policy is a response to a report into Payment Terms and Practices by Australian Small Business and Family Enterprise Ombudsman Kate Carnell. Released in April, the report highlighted the ramifications, for small businesses, arising from the practice of late and extended payment times, including restricted growth and solvency issues. It called out a practice, amongst large organisations, of using small businesses in their supply chain as a ‘cheap form of finance’ by extending payment times.

McCormack said the Government’s revised pay on time policy will set an example to industry and for other levels of government and help establish a culture where small business should not be used as a bank.

“We are delivering the right policy settings to see small business thrive and keep the cash flowing which keeps our economy humming along,” he said.

When the Government stated, in November, that agencies were paying 97% of small business invoices within 30 calendar days, Carnell told Dynamic Business that while it was a “step in the right direction”, the Government “can do better” because 3% of invoices were still not being paid on time – “that’s a lot of money”.

Related: The Federal Government commits to paying small businesses ten days sooner by July 2019 and Small businesses being used as ‘cheap form of finance’ by larger ones: late payment inquiry.