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Government taking longer to pay small business

Government is lagging behind on paying invoices to small business according to the most recent survey of 40 government agencies.

Released on Friday by Small Business Minister Bruce Billson, the results show the number of invoices paid by government within a 30 day timeframe has slipped marginally from 96.8 per cent to 96.1 per cent over the 2012-13 financial year.

In total, 803,377 invoices amounting to $2.8bn were paid within the 30 day time-frame while a further 32,546 invoices were paid late totalling $215 million. Only 1.8 per cent of small business invoices were paid after a period of 60 days.

The total interest paid on late invoices was $35,110 of which $3,061 was paid on late invoices over 30 days and $32,048 on late invoices paid after 60 days.

Government agencies are expected to meet a benchmark of paying up to 90 per cent of correctly rendered invoices within a 30 day time period.

The most recent report, available on the Treasury website, finds that only the former Department of Health and Ageing failed to meet the 90 per cent benchmark. It paid 89.58 per cent of small invoices on time. The Department of Infrastructure and Transport had the best record, paying 99.87 per cent of invoices on time.

While 39 of 40 government agencies met the 90 per cent benchmark in 2012-13 only 5 of 17 agencies were able to meet the benchmark in the first six months of 2002 indicating a marked improvement over time.

A new policy introduced in September 2012 meant that agencies were required to pay interest on contracts valued up to $1 million if payment had not been made within the 30 day period upon the request of the small business. After 60 days, the government agency would need to make an automatic interest payment.

The new system has resulted in 465 late interest invoices being paid in the 2012-13 financial year, 453 of which were automatically generated. This is significantly higher than the total of 50 interest invoices paid in the 2011-12 financial year.

From July, all small businesses will receive an automatic interest payment from the government if a department fails to pay a small business invoice within the 30 day time frame.

“Under Labor small businesses had to apply to receive interest for invoices that were between 30 and 60 days late,” Mr Billson said. “We understand the vital contribution small business makes to the community and our economy and how important cash flow is.”

“No small business should be left waiting for payment, which is why as a Government we want to lift the standard of payment performance or compensate small business for the Commonwealth’s tardiness.”





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Joe Kelly

Joe Kelly

Joe Kelly is a writer for Dynamic Business. He has previously worked in the Canberra Press Gallery and has a keen interest in business, the economy and federal policy. He also follows international relations and likes to read history.

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