Government leads the way to reduce payment times

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18 January 2021

Small business Machinery of Government (MoG) changes 2021
This content is under review. The small business function transferred to Treasury as a result of the Administrative Arrangements Order made on 15 April 2021 with effect from 15 April 2021.
 

The annual Australian Government Pay On-Time Survey has shown that government agencies paid a record 90.6% of invoices for contracts of up to $1 million within 20 calendar days for 2019-20. This is a significant improvement compared to 61.7% in 2018-19.

In value terms, agencies paid 85.2% of low value invoices in 20 days in 2019-20, up from 42.9% in 2018-19.

The survey supports the Supplier pay on-time policy. The policy requires government agencies to pay invoices up to $1 million in 20 days, or 5 days when using e‑invoicing.

92 agencies reported on their compliance through the survey for the 2019‑20 financial year, providing transparency about government payment times.

Long and late payments are a significant problem for small businesses. Research undertaken in 2019 showed that late payments from large to small and medium sized businesses were estimated at $115 billion annually, with $7 billion owed to small businesses at any given time.

Paying low value invoices in timely manner demonstrates government commitment to support small business, and improve their cash flow to invest, hire and grow.

By taking the lead on paying bills on time, the government is also setting a benchmark for industry to reduce payment times for small business.

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