Supplying a government agency? How fast it has to pay you, and when the clock really starts

Government agencies have to pay small suppliers on fixed terms. Federally it’s 20 calendar days (5 for agreed eInvoices). NSW pays registered small businesses within 5 business days. Victoria pays within 10 business days on invoices up to $3 million. Queensland pays registered small businesses within 20 calendar days. In every case the clock only starts once your invoice is correct.

That’s the short answer. The longer one matters more, because a government customer is often the biggest, slowest-to-start and most paperwork-heavy account a small business will ever have. The money is about as safe as it gets. The date it arrives is where owners come unstuck.

Which payment rule applies to your contract?

It depends on who signed the purchase order. Four policies cover most direct government work in Australia:

Customer	Policy	Maximum term	Who it covers	Late payment
Australian Government (non-corporate Commonwealth entities)	Supplier Pay On-Time or Pay Interest Policy (RMG 417)	20 calendar days; 5 calendar days for agreed Peppol eInvoices	All suppliers, regardless of contract value	Interest at the ATO general interest charge rate once it accrues past $100
NSW Government agencies	Faster Payment Terms Policy	5 business days	Registered small businesses (fewer than 20 FTEs), invoices of any value	Interest at the agency’s discretion
Victorian departments and major agencies	Fair Payments Policy	10 business days	Invoices up to $3 million	Penalty interest under the contract terms
Queensland Government departments	On-time Payment Policy	20 calendar days	Registered small businesses (fewer than 20 employees)	Penalty interest you claim, $20 minimum

A few edges to know before you rely on that table:

• Corporate Commonwealth entities aren’t bound by RMG 417; they’re encouraged to follow it.
• NSW excludes state-owned corporations, universities and some other bodies, plus construction work covered by the state’s security of payment law.
• Queensland exempts a long list of payment types department by department — credit card payments, grants, backdated invoices and some construction projects among them.
• Councils, government business enterprises and the other states and territories run their own terms. Read the contract.

If you’re a subcontractor to a big head contractor on a federal job, a different rule applies to them. Our big customer payment times guide covers the Payment Times Procurement Connected Policy.

When does the payment clock actually start?

This is the part that catches people. The clock does not start when you hit send.

Commonwealth. The due date is calculated from the start of the next calendar day after the agency has done two things: receipted a correctly rendered invoice and acknowledged satisfactory delivery of the goods or services. If the invoice needs correcting, the agency shouldn’t receipt it until it’s fixed. If the due date lands on a weekend or public holiday, payment isn’t due until the next business day.

NSW. Five business days from when the invoice reaches the agency’s authorised area — usually shared services or accounts payable — not from when your contact in the agency reads it.

Victoria. Ten business days from receipt of a correct and complete invoice. Incorrect, incomplete or disputed invoices fall outside the terms.

Queensland. Twenty calendar days, for correctly rendered, undisputed invoices.

So the real timeline is: deliver → get delivery signed off → invoice exactly to the contract → invoice lands in the right inbox → then the days start counting. On a first invoice, the gap between finishing the work and the clock starting can easily be longer than the payment term itself.

What makes an invoice “correctly rendered”?

Each agency has its own checklist, but the failures are boringly consistent:

1. Wrong or missing purchase order number. The single most common reason an invoice sits in a queue.
2. Wrong entity. Departments restructure and rename. Invoice the legal entity named on the contract.
3. Not a valid tax invoice. ABN, GST shown correctly, your business details matching your supplier record.
4. Amounts that don’t match the contract — a rate, quantity or milestone that differs from what was approved.
5. Sent to a person rather than accounts payable. Your project contact can’t start the clock.
6. Bank details not yet verified on the agency’s vendor file.

Fix all six before the first invoice, not after the first query. If you’re quoting on federal work, ask whether the agency takes Peppol eInvoices — where both sides agree to use them, the federal maximum drops from 20 calendar days to 5.

Do you have to register to get the faster terms?

In two states, yes — and it’s the easiest money you’ll never chase.

• NSW says registration on the buy.nsw Supplier Hub is essential for timely payment. To qualify you need fewer than 20 full-time equivalents and can’t be a subsidiary of, or joint venture with, a medium or large business.
• Queensland asks small suppliers (fewer than 20 employees) to register on its On-time Payment Small Business Register to be paid within 20 calendar days.

Do it the week you win the work. If the registration isn’t in place, the agency may simply pay on its standard terms.

Already holding a signed government contract and a pay run that lands before the first payment? Check what’s possible before that date →

What if the agency pays late?

Your options depend on the policy:

• Commonwealth: interest is payable at the ATO’s general interest charge rate, calculated daily from the day after the due date to the day of payment — but only when the interest accrued exceeds $100.
• Queensland: you submit a penalty interest claim to the department, at the unpaid tax interest rate, for each day past day 20. Paid on day 25? That’s five days’ interest. The minimum payment is $20.
• Victoria: the Fair Payments Policy provides for penalty interest on late payment, set out in your contract terms. Check whether you need to give notice to claim it.
• NSW: agencies may pay interest on late accounts if their own supplier payment policy says so, and are encouraged to on significantly late small business payments.

Late-payment interest is a fair recovery, but it’s paid in arrears. It doesn’t cover Thursday’s pay run. Escalate early: confirm the invoice was receipted and on what date, then ask for the scheduled payment date in writing. In Victoria, the Victorian Small Business Commission can help if a payment dispute stalls.

How do you plan cash around a government contract?

Work back from the realistic payment date, not the contract date. Here’s the timeline view we’d use.

Window	What to do
Today	Confirm which policy applies, register (NSW/Qld), check your vendor record and bank details, and get the exact invoicing instructions in writing.
This week	Map every pay run, payday super date, supplier account and BAS date between first delivery and the realistic first payment. Put them in the deadline planner.
This month	Size any gap: the total of what goes out before the first payment lands, plus a buffer for a queried invoice. Decide how you’ll cover it before the work starts.

The buffer matters. One rejected invoice can push the first payment out by a whole billing cycle — and the first invoice is the one most likely to be rejected.

An illustrative example

Illustrative example only. A commercial cleaning business in Brisbane with 14 staff wins a 12-month contract with a Queensland Government department, starting Monday 2 November 2026. It pays wages fortnightly and invoices monthly in arrears.

• 2 November: work starts. Wages run on 13 November and 27 November.
• 30 November: first invoice issued. It’s missing the new purchase order number and is sent back on 3 December.
• 4 December: corrected invoice received. The 20-calendar-day clock now runs to 24 December.
• 11 December and 24 December: two more pay runs — the second brought forward from Christmas Day to the same day the payment is due, with banks closing for Christmas soon after.

Four pay runs before the first dollar arrives, and a December cash crunch on top. Had the owner registered on the small business register, checked the PO details first and sized funding to cover two months of wages, the contract would have been a win from day one instead of a scramble. The new-contract wages page covers that gap in more detail, and the payroll page covers what’s possible when pay day is already close.

What about Christmas and the new year?

Two things to put on the calendar now:

• Business days shrink in late December. NSW and Victorian terms count business days, so public holidays stretch them. A Commonwealth due date that falls on a public holiday rolls to the next business day.
• Commonwealth terms are changing. The Department of Finance has flagged updated payment terms in RMG 417 from 1 January 2027, with current terms applying until then. If you’re quoting federal work that invoices into 2027, read the updated guide on finance.gov.au before you set your cash plan.

Also: if a contract needs a bank guarantee or security deposit before you start, that’s a separate deadline. See contract security.

Government work is good work. Don’t let the first payment date sink it

A signed agency contract is one of the strongest things a small business can bring to a funding conversation: a creditworthy customer, a defined term, and a published rule for when it pays. What it can’t do is make that first payment arrive before your first three pay runs.

That gap is exactly what the Deadline Desk is for. The enquiry takes about 60 seconds and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders and hope one bites — your phone won’t light up with strangers. A real person reads your situation, looks at the contract and the dates, and calls you back.

Please fill the form in accurately: the agency, the contract start, your first invoice date and your pay-run dates. The more precise you are, the faster we can match the right option the first time.

See if you qualify →

Prefer to talk it through? Ring 1300 752 188.