Accounts Payable Policy

Policy Statement and Objective

NSW Government policy is to pay small business suppliers within 5 days and all other suppliers within 30 days for Goods and Services with some special provisions in place for small business and other suppliers. 

All reasonable steps to pay correctly rendered invoices within this period must be taken.

Scope 

This policy applies to all Department of Creative Industries, Tourism, Hospitality and Sport (DCITHS) staff especially those involved in the purchasing and payment of goods and services.

Summary

It is NSW Government policy that small business suppliers are paid within 5 days and all other suppliers within 30 days of receiving a correctly rendered tax invoice unless an existing contract or offer provides for a variation to the payment term.

For general suppliers, shorter or longer terms are permitted, but payment terms longer than 30 days will only be allowed where the supply of the goods and services or the structure of the purchase makes it impractical to require payment within 30 days.

1. Purchase Order

A Purchase Order (PO) should be raised for the procurement of most goods and services. The PO is issued to the supplier upon execution of a contract and prior to the delivery of the goods or the commencement of the service. 

The PO should contain information such as supplier name, ABN and contact details, the goods or services being procured, the value of the goods or services, etc. Suppliers must quote the PO number on the correctly rendered invoices issued to DCITHS.

POs are used to:

• ensure that purchases are authorised before goods and/or services are supplied
• ensure that there is a formal agreement with suppliers for the goods or services procured with agreed terms and conditions
• enable invoices to be processed efficiently to minimise payment delays to suppliers
• allow for more accurate and timely reporting, budgeting and forecasting of expenditure.

There are limited exceptions where POs are not required, and include:

• purchases using Pcards
• travel booked through FCM Travel
• postal and courier services
• rent
• grants and sponsorships
• reimbursement (e.g., relocation cost & Study Fee reimbursement)
• overseas payments.

Any exceptions must be approved by the Chief Financial Officer or a higher delegate.

2. Definition of a correctly rendered Tax Invoice

Payment is made on production of a correctly rendered tax invoice. The tax invoice must:

• provide business registration number i.e., ABN for businesses in Australia
• clearly itemise the GST amount or states that the business is exempt for businesses in Australia
• received at the address shown on the PO or other advice, e.g., e-mail
• quote a valid PO number, or in the absence of a PO number, name or e-mail address of DCITHS contact person who procured the goods or services
• provide address of the supplier
• be dated
• clearly itemises the goods supplied and/or services provided
• bank account details.

Tax invoices must not be changed manually, if incorrect, request the supplier to cancel and reissue a replacement tax invoice.

3. Payment Terms 

Payments for goods and services received, unless procured from small businesses, should be made within 30 calendar days of receiving a correctly rendered tax invoice. The 30 days period is calculated from the date the invoice is received by DCITHS.

Payments to a registered small business must be made within 5 calendar days to avoid late interest payments.

4. Definition of a Small Business

A small business is defined by the Small Business Commissioner as a business with less than 20 employees and have registered themselves on BuyNSW as a small business.

5. Payments of Accounts, including late interest payment

Where payments to a small business are not made within 5 days of receipt of a correctly rendered tax invoice, and requested by the vendor, interest may be paid on the overdue amount if the interest exceeds $20.

Simple interest is calculated on the unpaid amount from the day after payment was due up to and including the day that payment is made.

Interest is determined under Section 22 of the Taxation Administration Act 1996, unless a higher interest rate is defined in the contract in case of late payment. Where a higher interest rate is not defined the appropriate interest rate is available from NSW Treasury Circular TC11/20 Implementation of Penalty Interest on Late Payment of Accounts.

There is no interest on late payments to a business that is not a registered small business.

6. Payment Cycle

DCITHS payments are processed by GovConnect. There are two payment runs weekly, Wednesday and Friday. If payments are ready to be paid well before the due date, they may be held over and released/ paid just prior to the due date.

At the end of the financial year, there is an earlier cut off for payments resulting in tax invoices not paid in the last week of June. In this and similar instances, the unpaid expense can be accrued.

7. Urgent Payments

Urgent payments can be processed on any day outside the weekly pay-runs of Wednesday and Friday. However, a ticket request to GovConnect is required and will incur an additional cost. Out of cycle pay-runs should only be used under urgent and unavoidable circumstance. 

Prior approval must be obtained from the Chief Financial Officer.

Variation

DCITHS may amend this policy from time to time as appropriate.