Australian Government Mandates Quicker Payment to Small Businesses on Infrastructure Projects

The Australian government plans to cut payment times for small businesses on public contracts by up to a third as it attempts to encourage small business competitiveness in infrastructure projects, according to a recent report in the Brisbane Times.

The changes, suggested by the Australian Small Business and Family Enterprise Ombudsman, will impact more than 6,800 businesses that have been hampered by month-long payment times for work on government contracts, the publication reports. As of last week, the Australian government will have to pay invoices for contracts worth up to $1 million within 20 days.

According to a 2016 Dun & Bradstreet report cited by the Brisbane Times, contractors for businesses with 500 or more employees saw average payment delays of 18 days beyond 30-day terms. The ombudsman said up to half of all small businesses had more than $20,000 owed to them.

"Adverse payment terms between businesses can have a negative impact on competitiveness, increase the cost of doing business and place significant stress on owners," Federal Small Business Minister Michael McCormack was quoted as saying in the report.

Small firms in Australia with a turnover of up to $50 million per year will also benefit from recent tax cuts—from 30% to 25%—that will be phased in by 2027, the Brisbane Times reported.

– Nicholas Stern, managing editor

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