Finance

“It’s a win”: Government to commit to 20 day payment times for small business

Emma Koehn /

Prime Minister Malcolm Turnbull attends the 199th Birthday lunch for the Westpac Banking Group in Sydney, Wednesday, April 6, 2016. (AAP Image/Dean Lewins) NO ARCHIVING

The small business ombudsman has praised the federal government ahead of an expected announcement from Prime Minister Malcolm Turnbull today that government departments will be expected to pay small business contracts within 20 calendar days.

Fairfax reports Turnbull will commit to bills being paid before the 20-day mark, months after the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) released a report from an inquiry into payment times revealing delayed payments to SMEs from both the public and private sectors were having a significant impact on cashflow.

The Prime Minister will attend a small business round-table with the Australian Chamber and Commerce and Industry at lunchtime on Wednesday to meet with those in the small business community.

Small Business and Family Enterprise Ombudsman Kate Carnell tells SmartCompany the announcement, which would see contracts of up to $1 million paid in the 20 day window instead of the current 30 day standard, is a “win and a big step in the right direction”.

Carnell says a plan for government departments to report back on their performance when it comes to clearing small business invoices will also be of significant interest to her office.

The other bit that’s a win is government departments will be required to report on how they’re delivering, and we will be watching this,” she says. 

There’s still plenty of work to do with government departments to ensure smaller businesses have access to contracts on offer, however, with Carnell signalling a focus from ASBFEO on procurement practices going forward.

An inquiry into government procurement is something that we will be focusing on,” she tells SmartCompany

Given the “bottom line” is SMEs want to get paid for their services, ASBFEO says today’s announcement shows the success of its review into payment times.

“We’re happy to accept this, and for us, it’s a win,” Carnell says.

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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  • Steve Smallman

    Congratulations Prime Minister, this is Step 1.

    Step 2 is to incorporate the requirement for payment into all Government issued contracts for Contractors to commit to the same terms, i.e. pay their sub-contractors in 20 days and to require this provision to be replicated all the way down the contract chain. Importantly, this requirement must not be able to be contracted away. Any contract provision that claims to do so should be specifically declared in the statute as void.

    Step 3 is to provide a complaints mechanism

    Step 4 is to have Departments audit themselves and their contract chains.

    Step 5 is to require all Principal Contractors and Head Contract holders to guarantee payments down the line in the same manner as the NSW Building Construction Security of Payments Act .

    Step 6 is to incorporate these provision into the Building Construction Code, requiring these provisions on all contracts as a pre-requisite for receiving contracts for Government work.

    Good start, keep up the good work, there is a long way to go.