November 27, 2018 at 4:33 pm #2503
The State Government has committed to pay bills on time, or automatically pay interest once 30 days have passed.
As part of this commitment, the State Government introduced legislation, effective as of 1 November 2018, which requires interest to be paid on any undisputed invoice meeting certain criteria and not paid within 30 calendar days of the date received by a public authority.
The legislation applies to invoices received on or after 1 November. In practice, this means no interest will be calculated and paid until at least 30 calendar days after that (i.e. on 1 December or later).
The main criteria for determining whether interest is paid include:
• The invoice has a value of $1 million (GST exclusive) or less
• The amount of interest to be paid is $10 or more
• The invoice was issued by a business which is incorporated under the Corporations Act 2001 (Cwth)
• The invoice has been correctly rendered (e.g. GST compliant, appropriately addressed, etc.) and is not disputed.
The legislation excludes certain invoices, including where the associated contract:
• Makes specific provision for payment terms greater than 30 days
• Makes specific provision for interest payments if a payment is not made in accordance with the contract terms
• Is covered under the Building and Construction Industry Security of Payment Act 2009.
The scope of the Act has also been expanded to cover all businesses trading with the South Australian Government, rather than the previous limitation to small businesses, which Business SA recommended before the election. There are no longer excluded agencies as previously existed prior to the amendment, again a matter Business SA had lobbied for to ensure accountability across the Government.
Where applicable, interest will be calculated for each day an invoice remains overdue past 30 calendar days, applying the Reserve Bank Cash Rate (at the time) plus a five per cent penalty. The calculated amount of interest must be paid to businesses within 48 hours of when the overdue invoice is paid. There is no requirement for businesses to request interest payments – the process will occur automatically.
Further information regarding the new legislation, including Frequently Asked Questions, is available on the My Invoice website. This website also includes details of who to contact should you have any further questions, a copy of the legislation and a calculator to estimate the amount of interest you may be entitled to for a particular overdue invoice.
From: Business SA <firstname.lastname@example.org>
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