What is the Faster Payment Terms Policy?
Cash flow has always been a major issue for small businesses — they don’t have the same access to capital as big businesses. A third of small businesses say late payments have affected their personal finances and their ability to cover basic expenses like rent, wages and utilities.
The NSW Government has committed registered small businesses that supply to in-scope government departments will be paid within 20 calendar days of receiving a correctly rendered invoice for goods or services provided between $10,000 and $1 million. This is to be in place by the end of 2018.
Payments up to $10,000 can be paid instantly by PCard.
Faster Payment Terms Policy
How is 'small business' defined under this policy?
A small business is an Australian or New Zealand-based firm that has less than 20 full time employees (or full time equivalent).
Why do I need to register as a small business?
As systems become more automated, by providing your status as a small business this can be linked this to your ABN so when you send in a correctly rendered invoice, the system will know your invoice needs to be paid in 20 calendar days. Without registering, it is impossible for the system to know you are a small business.
How do I register as a small business?
Registration is fast and easy. Visit www.smallbusiness.nsw.gov.au/rego
to quickly enter your details and become registered. This registration will be made available to all government departments, so you will only need to register once for the whole of government.
Can I agree to payment terms shorter or longer than 20 days?
Contractual payment terms shorter than 20 days are permitted, if agreed to by a small business and a government agency. However, contractual payment terms longer than 20 days, if agreed to by a small business and a government agency, are permitted only if the nature of the goods and services or the structure of the purchase make it impractical to require payment within 20 days.
What happens if I’m not paid within 20 days?
Government departments are required to comply with this policy and whole of government performance will be monitored. While mandated interest payments are not part of this policy – departments are advised to take note of the impact of late payments to small business and use their discretion to pay interest to significantly late small business payments.
Why do I need a purchase order from a government agency?
Purchase orders are issued by NSW Government agencies to make sure requests for goods and services are approved, and to meet their own legal, record keeping and monitoring requirements. A purchase order also helps you as a small business, so you know when you are supplying goods or services to an agency that payment has been approved by an appropriate person, and that funding will be available to pay your invoice.
You should always ask for a purchase order before you provide goods or services to a government agency and make sure the purchase order number is recorded on your invoice.
However, if you supply goods and services less $10,000 than you may be eligible to be paid by PCard, in which case you will not need to ask for a purchase order — see below for more information on getting paid by PCard.
What is a 'correctly rendered invoice'?
A correctly rendered invoice which is also ATO compliant is one which:
- has included and meets the requirements of the approved purchase order (not applicable when being paid by PCard), and if applicable, the written contract
- is for amounts correctly calculated, and
- is for work properly performed (that is, goods received in good order and condition and/or services satisfactorily carried out).
Download an example of a correctly rendered invoice ((JPG 442.7 KB)).
Make sure you provide correctly rendered invoices and follow best practice invoicing procedures. Importantly, the timing of the 20 day payment policy commences only when the invoice is correctly rendered.
Download a Best practice correctly rendered invoice template ((XLSX 11.5 KB)).
Sending incomplete invoices (for example, without a purchase order number, or before goods have been received), will mean the 20 days payment timeframe will not commence until it is.
What is a PCard?
A Purchase Card (PCard) is a type of credit card used by NSW Government staff for low value purchases up to $10,000. The NSW Government will be directing the use of PCards for making payments up to $10,000.
The NSW Government encourages its employees to utilise the use of PCards for the payment of invoices under $10,000 where possible.
If you supply low value goods and services, up to $10,000, you should ask each agency you do business with if you are eligible to be paid by PCard.
Getting paid by PCard means you get paid instantly, and don’t need to get a purchase order from the agency before you supply goods or services.
What if I don't offer credit or debit card payments?
Expanding your payment options to include credit and debit card payments can assist you in keeping up with your customer’s payment preferences, in addition to managing the cash flow of your business.
There are many options for small business to consider when looking at accepting credit card payment:
- EFTPOS machines
- Countertop machines
- Mobile EFTPOS machines
- Integrated machines
- Smartphone and tablet credit card processing
- This usually involves a card ready that you attach to your smart device.
A credit card or card surcharge is an additional fee that can be applied by businesses when accepting payment using a credit card, debit card or prepaid card. It assists business in covering the costs of transactions paid for by card.
The Competition and Consumer Amendment (Payment Surcharges) Act 2016 prohibits all businesses from charging payment surcharges that are excessive. The Reserve Bank of Australia has detailed information on how to quantify costs that can be passed on to a consumer as a surcharge.
What should I do if a dispute arises over a payment under the policy?
Any complaint should first be raised with the relevant government agency’s accounts complaints officer. If the issue is not resolved, contact the NSW Small Business Commissioner on 1300 795 534.
If you have any questions about the Faster Payment Terms Policy contact us by phone 1300 795 534 or 02 8222 4800, or email firstname.lastname@example.org.