The payment conditions will be spelled out in the agreement between your company and the government organization.
Following receipt of a correctly rendered invoice and satisfactory delivery of goods or services, the most frequent payment terms are 20 days under the Pay on-Time or Pay Interest Policy. Depending on the terms of your contract, you may get paid in stages if the task is completed to your satisfaction.
The term “milestone payment” is used to describe this payment type. As a result of this agreement, you will be required to meet certain deadlines before you may submit an invoice for payment. The same rules apply to the payment of milestone bills.
Proper Invoice and Prompt Payment
Once the government receives an invoice, governments implemented the Prompt Payment Act to mandate payment within 30 days of receiving the invoice if a small firm completes its contract. As expected, there is a significant caveat.
Only if your invoice is declared “legitimate” under the law will the clock on this Act begin to run. Your invoice will be returned to you within seven days of the billing office receiving it if it is judged “incorrect,” with a summary of the reasons why.
Correcting the error, submitting a new application, and waiting for another 30-days will be necessary. When you submit a legitimate invoice to the government, you may expect “rapid payment” from them.
How to Make a Proper Invoice?
However, the following components are often included in an invoice that has been properly rendered:
- Identification of the source, such as the company name
- The supplier’s ABN
- An indication that a document is meant to be a tax invoice, such as the inclusion of the words “tax invoice” on the document
- The purchaser’s name or Australian Business Number (ABN) prominently displayed on the invoice for products or services costing $1k or more a unit of supply line item
- Description of the products or services offered
- The amount given
- The cost per unit
- When it comes to the amount of tax that has been added (if relevant)
- The sum of money that is must pay
- The terms of payment
- The name and contact information of the individual responsible for overseeing the contract
- The contract reference, the purchase order, the work order, or the formal order
- Instructions on how the government can pay your company include your bank account information or a copy of your credit card billing statement.
Since much of this data is already required if you’re registered for GST, it shouldn’t be too much of an inconvenience to produce an accurately delivered invoice.
What if we Don’t Get Paid on Time?
It doesn’t matter how big or little your firm is; if you’ve fulfilled your contractual obligations and presented a timely invoice, you deserve to be paid. For contracts worth less than $1 million, your government organization must pay interest to your company if it is late with a payment.
The interest accumulated exceeds A$100, following RMG-417: Pay on-time or pay interest policy. If your firm does not present a properly rendered invoice that complies with the written contract terms, including a purchase order contract, you will not owe interest to your company.
Similarly, you will not owe interest if your organization has not supplied the items or services it has promised to do so.
Will Government Use any EFT and Credit Cards?
The phrase “electronic funds transfer” now encompasses a government-wide commercial purchasing card due to recent legislation. Government purchases can be utilized as an EFT alternative under current law.
When it comes to financing and delivery payments for goods and services, a government-wide commercial the government utilizes purchase card, like a commercial credit card. Charges on a government buy card allow a third party to instant pay the contractor, such as a banking institution.
It will not include the CC account number in the contract, identifying the third party and the purchase card to be used. The contractor receives a separate account number for the purchasing card.
What if a Dispute Occurs on my Invoice?
The government (Australian) is expected to pay the uncontested portion of an invoice within regular payment conditions.
The government agency must flag an error with your invoice as soon as possible to ensure timely payment. You may reduce the number of disagreements over invoices by:
- For a properly rendered invoice, adhere to the terms of your contract to the letter.
- Before sending your invoice, double-check that all of its information is accurate.
- Make sure the contract manager for the Government organization is happy with the job you have done regularly, resolving any issues with your bills promptly.