Small biz granted creditor powers if Govt cant pay

By: Graham Gardiner


Small businesses will have the right to charge the Federal Government interest on new contracts if it fails to pay

Small businesses will have the right to charge the Federal Government interest on new contracts if it fails to pay on time, the Prime Minister has announced.

Speaking at the Small Business Summit in Brisbane last week, Kevin Rudd announced from December 1 new small businesses contracts signed with Commonwealth Government Departments up to $1 million will have to be finalised within 30 days otherwise small business will have the right to charge penalty interest.

According to the Prime Minister that is almost 70,000 contracts a year.

"If we don’t (pay) the proposal is this, you as small business can charge us interest until we do. I intend to lead by example," he said.

As a result Rudd also called on large businesses to lift their game and pay on time as well.

According to latest Dunn and Bradstreet trade payment figures – released on Tuesday - businesses with 500+ employees continue to be the worst payers, averaging double the standard term (59.3 days) to settle accounts.

"It makes a big difference to small businesses with cash challenges," Rudd said.

The Federal Government also committed to simplifying the tendering process for government contracts to increase competition.

Government departments and agencies will be required to review their operations and simply the procurement process.

"This will make it cheaper and easier for small business to participate in tenders," Rudd said.

You can also follow our updates by liking us on Facebook