Last month, South Australia’s Minister for Finance Michael O’Brien announced new reforms to speed up payments to small businesses supplying the SA Government.
A review of the supplier payment process stated that in 2011, Shared Services SA paid 82.7 % of its total invoices in 0 to 30 days, 12.6 % in 30 to 60 days and 4.6 % in 60 or more days. Mr O’Brien confirmed that too many invoices were being paid later than 30 days.
He announced that the reforms would include a provision for interest penalties on late payments. In addition to late penalties, the Minister for Finance said that the SA government would comply with the recommendations presented in the review.
“The Government has accepted all of Mr McCann’s recommendations, including the wider use of purchase cards,” Mr O’Brien said.
A purchasing card, also known as “purchase card”, “corporate credit card” or “procurement card”, is a form of company charge card that allows goods and services to be procured without using a traditional purchasing process. The card is granted to public servants with purchasing rights, such as procurement managers, school principals and business managers.
Mr O’Brien stated that increased use of purchasing cards would streamline the payment procedure by getting rid of invoice processing, ensuring prompt payments and improving the cash flow for small businesses.
“The legislation will be unique among Australian jurisdictions and is a visible and practical example of genuine reform to address an identified concern,” Mr O’Brien went on.
Although it is unique legislation, other state governments also highlight needs for speeding up supplier payments. NSW Treasury’s 2011 Expenditure Review showed that the NSW Government wrote more than 2.6 million cheques in 2009-10 and recommended switching to purchasing cards for a faster payment procedure. Furthermore, the WA Government’s Guidelines for Suppliers show that purchasing cards guarantee payment within 48 hours as opposed to the usual 30, 60 or 90 payment terms.
