Payment times for government contracts cut to 20 days
Small and family businesses will now receive payment for government contracts under $1 million in 20 days.
From 1 July, the government will pay invoices for Commonwealth government contracts under $1 million within 20 days.
Moreover, the government said it is working to require large businesses to match the government’s 20-day payment terms or they risk losing future government contracts.
“The Morrison government is backing the 3.4 million small and family businesses that underpin Australia’s economy by ensuring they get paid on time, boosting their cash flow and helping them grow,” Finance Minister Mathias Cormann and Small and Family Business Minister Michaelia Cash said in a joint statement.
“We understand the importance of cash flow to small businesses – we know that cash flow is vital to each and every business, that is why we are doing everything we can to ensure businesses are paid on time.”
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.
“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 ministers stated.
The government has also announced it is currently developing an annual reporting framework, requiring large businesses with over $100 million turnover to publish information on how they pay small businesses.
“Our promise to small and family business is clear, we want them to pay less tax, cut red tape and have better access to finance to help grow their businesses. We will also do more to help small and medium sized business compete for government contracts with our commitment to have 35 per cent of all contracts up to $20 million delivered by small and medium businesses,” Mr Cormann and Ms Cash concluded.
The government has also pledged to cut taxes for small and medium businesses to 25 per cent in 2021-22.