From 1 October 2020, WA State Government agencies must ensure that all payments of less than $1 million for goods or services, excluding construction works, are made within 20 calendar days of:
- receiving a correct invoice, or
- provision of the goods or services (whichever is later).
For works and construction payments, 20 day timeframes following the receipt of a correctly rendered invoice will apply from 1 April, 2021.
With cash flow being a key concern for most small businesses, the mandatory 20 day payment timeframes will ensure that the State Government continues to support the viability and growth of small businesses during the COVID-19 recovery period and beyond.
In 2018-19, WA government agencies spent more than $14 million on goods and services and just under $1 billion on common use arrangements (a standing arrangement for the provision of specific goods or services commonly used within government). They also awarded more than $5 billion in contracts.
Why is this important?
Shorter payment timeframes can improve cash flow for small businesses by minimising exposure to debt. Requesting payment from customers on the shortest payment terms will keep cash flowing into your business when you need it, to pay for your immediate expenses.
To avoid late payments, issue invoices promptly once the work has been completed or at agreed milestones, with clearly defined terms and conditions for payment. In WA, payment terms are considered part of a sales contract.
What should you do?
If you are a small business that supplies goods or services to a WA Government agency, ensure you update the due dates for payment of your invoices to reflect the 20 calendar day payment timeframe. For construction and works invoices, the payment deadlines should be updated to 20 days from the invoice date from 1 April, 2021.
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