Around the globe, countries are taking notice of late payments impact on business. In 2018, the U.K. introduced legislation to ensure small- to medium-sized businesses (SMBs) get paid on time. In early 2019, Australia introduced legislation to address late supplier payments. Now, the U.S. is joining the ranks with legislation to shorten the payment terms between the federal government and SMBs.
On April 19, Washington Technology reported on the "Accelerated Payments for Small Businesses Act," which would shorten the length of time the federal government has to pay small businesses that are acting as prime contractors or subcontractors. The payment period would decrease from the current 30-day standard to 15 days.
"The [government] shutdown highlighted the issue of unpaid invoices for contract work faced by businesses of all shapes and sizes, but especially by smaller firms," the report states. "Many furloughed federal civilian employees were those responsible for processing invoices to pay contractors for their work."
The article notes similar legislation is already in place but only for the Defense Department.
—Andrew Michaels, editorial associate