New law ensures faster payment times for small-business subcontractors

Ombudsman, subcontractors
3D illustration of “INDEPENDENT SUBCONTRACTOR” title on business document

Businesses with Commonwealth government contracts will have to pay their small-business subcontractors within 20 days or risk fines and penalties under new laws.

The Payment Times Procurement Connected Policy, introduced by the Federal Government, means that large businesses with Commonwealth government contracts of over $4 million are required to pay their small-business subcontractors of up to $1 million within 20 calendar days. If they fail to do so, large businesses will have to pay the subcontractors added interest.

“Fair payment times are incredibly important for the viability of small businesses, and I welcome the beginning of this significant policy,” Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, said.

In addition, the law stipulates that businesses must also “take reasonable endeavours” to ensure smaller businesses throughout the supply chain of their contract are paid on time by other subcontractors. The law also states that in the event of possible disputes that may arise, small and family businesses will now be able to lodge a complaint through the Treasury at [email protected]

Businesses can contact the Australian Small Business and Family Enterprise Ombudsman for guidance and support on how to navigate this process.

“Challenging large businesses payment practices can be daunting for smaller businesses. I always encourage an initial conversation between the parties to try to resolve a dispute,” Billson said. “But if this is difficult, my Office is here to provide support and guidance to try to resolve your dispute.”