Updated Fair Payment Policy impacts some HSV contracts

The Victorian Government has updated the 2004 Fair Payment Policy to help support fair and timely payments to small businesses. The 30-day payments terms have been reduced to 10 business days for applicable contracts.  

Information provided by the Department of Jobs, Precincts and Regions explains that managing cash flow one of the greatest challenges facing small businesses and this reform is a practical way for government departments and agencies to support the economic recovery of small businesses.

The updated Fair Payment Policy only applies to contracts with some health services, and only applies to purchases with a contract price of under $3 million.   

The policy change applies to contracts with the following agency and health services: 

• Department of Health
• Alfred Health
• Austin Health
• Eastern Health
• Melbourne Health  
• Monash Health.  

Contracts with other health services are not affected by the update. 

Impacts on health services and suppliers

The policy change came into effect on 1 January 2021. Affected health services and suppliers that have contracts with the affected health services should be aware of the following impacts of the policy update:

• The updated Fair Payment Policy applies to all applicable purchases under $3 million, regardless of whether the contract is through HealthShare Victoria or not.
• The health services named in the policy are required to pay invoices for all applicable purchases within 10 business days, including purchases under HSV contracts.  
• New contracts valued at less than $3 million will need to include a fair payment clause. In accordance with the government requirements, all HSV contracts executed after 1 January 2021 will contain the new fair payments clause (as it applies to the five named health services and the Department of Health). HSV is responsible for including this clause in contracts prepared by us, and the named health services and Department of Health will need to make sure the clause is included in non-HSV contracts.  
• It is not necessary for HSV to otherwise update the payment terms in contracts with our suppliers as the change to payment terms is beneficial to suppliers.  
• From 1 April 2021, payments not made on time are subject to penalty rates. Interest payable on late payments will be in accordance with existing Victorian legislation – the Penalty Interest Rates Act 1983. The current penalty interest rate is available from the Department of Justice and Community Safety website.

This information also applies to the Department of Health, as the department has access to HSV contracts. 

More information

For more information on the policy, visit the Department of Jobs, Precincts and Regions website.