About RMG417
The Supplier Pay on-Time or Pay Interest PolicyExternal Link (RMG 417) applies to Australian Government NCEs. It defines the 2 conditions that must be fulfilled before any payment time calculations start. The conditions are:
- acknowledgement of the satisfactory delivery of the goods or services
- receipt of a correctly rendered invoice.
Further, RMG 417 definesExternal Link:
- acknowledgement of the satisfactory delivery of the goods or services as 'the NCE has confirmed that the goods or services have been delivered in accordance with the terms of the contract'.
- receipt as 'the day that the correctly rendered invoice is accepted by the NCE following the acknowledgement by the NCE of the satisfactory delivery of goods or services'.
- a correctly rendered invoice as 'an invoice which is:
- rendered in accordance with all the requirements of the written contract (note that written contracts will often specify that the invoice must be a tax invoice and/or that certain information must be included in the invoice and/or the format of the invoice); and
- for amounts that are correctly calculated and due for payment and payable under the terms of the written contract'.
Therefore, the policy's payment time (5 or 20 days) does not necessarily start at the time the invoice is sent by the supplier or first received by you. This timing is often determined by the software solution in place. The payment time starts only after an invoice:
- has been checked against the contract terms.
- is confirmed to match what’s been delivered
- is for the expected amount.
That is, after a 3-way-match.
A reasonable allowance of time for the delivery of the goods or services and for the person responsible to acknowledge they are satisfactory is often documented in contract or purchase order terms (for example, section 11 of the Commonwealth Contracting Suite’sExternal Link Commonwealth Purchase Order Terms).
This policy is currently under review.
Managing suppliers’ expectations
Communication is key to managing your suppliers' expectations of when they’ll be paid. The Department of Finance’s Selling to Government – Getting paidExternal Link guide can help with this. But you may also like to provide updates to your suppliers as their eInvoice flows through your process – these may be able to be automated.
When a new supplier starts sending you eInvoices, consider notifying them of the following:
- You have the eInvoice and it is being reviewed. Once this check is complete, payment times begin.
- They will then be paid promptly (more about the Commonwealth Government’s standard payment terms can be found at Selling to Government – Getting paidExternal Link). Highlight that you will contact them if you need more information.
- They can find the information you require to be able to process an eInvoice on your agency’s website. Provide a link to the page on your agency’s website that lists your specific requirements.