Earlier this week, the government announced that federal government departments and agencies will now be required to pay invoices for contracts worth up to $1 million within 20 calendar days, following a recommendation of 15 business days put forward by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
Institute of Certified Bookkeepers executive director Matthew Addison said the announcement was a “great step forward but not necessarily far enough”, calling on the government to mandate electronic invoicing (e-invoicing) that will see payments processed in “within hours”.
“Why should it take government 20 days to process a requirement to pay funds for a legitimate and approved obligation?,” said Mr Addison.
“Government needs to mandate that all its purchasing will be with e-invoicing enabled suppliers — digital invoices received according to the Digital Business Council's e-invoicing interoperability standard. Technically this standard is being enabled by technology that will be in place by April 2018.”
“We call on the government to mandate that government departments only receive e-invoices and that they only issue e-invoices to be implemented by June 2019,” he added.
“Using contemporary technology that receives an e-invoice we should then have a process to authorise and then pay within hours and not within 20 days.”
However, Direct Management director Diane Lucas said the announcement would bring relief to clients, who often had to contend with delayed payments.
“A 20-day cycle has to be better than previous terms,” said Ms Lucas.
“It may not be the requested 15 days, but in all fairness, an SMB may not be the most prompt in providing their invoice to the department.
“So if payment terms are based on invoice date, then a 20-day turnaround is a reasonable expectation.”
Mr Addison also believes shorter payment times can filter into the commercial environment and urged bookkeepers to embrace better invoicing programs in light of impending change.
“If the government enables the economy-wide infrastructure we will progress the Australian payment environment into the commercial business-to-business environment,” added Mr Addison.
“Professional bookkeepers should be embracing techniques to deliver invoices digitally using today’s technology, which is more than emailing PDF invoices.
“They must be enabling the receiving of invoices using digital technology, even those that read the PDF or scan the receipt and using OCR services to turn the paper or PDF into data that is automatically received into the accounting programs.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.