Release type: Media Release


Morrison Government leads by example with new small business payment times benchmark in full effect


The Hon Stuart Robert MP
Minister for Employment, Workforce, Skills, Small and Family Business

The Morrison Government is backing small business suppliers of Commonwealth contracts, with the Payment Times Procurement Connected Policy to come into full effect from 1 October 2021.

Large business that are awarded Commonwealth contracts valued over $4 million will be required to pay their supplier contracts (of up to $1 million) within 20 calendar days, or face interest penalties.

The policy is part of the Morrison Government’s commitment to pay its suppliers on time and is designed to boost cash flow across the Australian economy.

Minister for Employment, Workforce, Skills, Small and Family Business, Stuart Robert, said the Federal Government’s approach demonstrated it is committed to ensuring prompt payment times to businesses down the supply chain.

‘We recognise how vital cash flow is for Australian small businesses and we know late payments can be damaging’ Minister Robert said.

‘We know when small businesses have confidence they’ll be paid on time there are wider economic benefits helping businesses to grow, invest and employ more Australians.

‘The Morrison Government is leading by example in fast-tracking payment of contracts—this is now the benchmark for large businesses awarded Commonwealth contracts and I will be keeping a close eye on it being adhered to.’

The Payment Times Procurement Connected Policy will apply to the same large businesses that are required to report their payment terms and practices under the Payment Times Reporting Scheme, which increases the transparency of payment times from large businesses to small suppliers.

Small and medium-sized enterprises (SMEs) represented more than half (51.6%) of Commonwealth contracts by number in 2019-20 and 25.2% by value.

The Payment Times Procurement Connected Policy guidelines are available on the Treasury website, assisting large businesses and government agencies to understand their rights and responsibilities under the policy.