The Victorian Government's 2002 Small Business election policy contained a commitment to introduce a fair payments clause into Government contracts, to improve cash flow certainty for Victorian small and medium sized businesses.
Specifically, the commitment stated that 'under the fair payments clause, all Victorian Government departments will be required to pay suppliers within 30 days of receipt of invoices for goods and services supplied. To ensure compliance with this requirement, the fair payments clause will introduce an obligation on Government departments to pay penalty interest on payments that are not made within the specified period'.
The fair payments policy was implemented in the ten Victorian Government departments from 1 November 2004. All Victorian Government departments are required to insert a fair payments clause into new contracts valued at less than $3 million. The clause requires payment of debts within 30 days of receipt of invoices for goods and services supplied. To ensure this occurs, Government departments are obliged to pay penalty interest rates on payments that are not made within 30 days.
In August 2006 the Victorian Government's Small Business Statement, Time to Thrive was released and contained the commitment that the 'Victorian Government will extend to major and significant agencies the commitment to paying bills within 30 days (for contracts valued at less than $3 million)'.
The following information is provided as a guide to assist agencies in complying with this important small business policy commitment.
In order to allow time for departments to make the appropriate administrative arrangements, the fair payments provisions will come into effect from 1 July 2007.
