The Government has announced that the failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts. The move is part of a new prompt payment initiative to ensure all Government suppliers and subcontractors benefit from being paid on time.
The new initiative will come into force in Autumn 2019, and will ensure the government only does business with companies who pay their suppliers on time, many of which are small businesses. The move will promote a healthy and diverse marketplace of companies providing public services.
Cabinet Office Minister, Oliver Dowden said:”Paying invoices promptly is vital in providing healthy cash flow, particularly for smaller businesses who are the backbone of the UK economy, to help them survive and thrive.
The Specialist Engineering Contractors’ (SEC) Group – representing the largest sector of UK construction (by value) – said that such measure was long overdue and urged Government to act upon it. SEC Group’s CEO Professor Rudi Klein added:
“For some years we have been advocating a yellow/red card policy for public sector procurement. In other words poor payers should be warned about their payment performance and then banned from public sector contracts if their performance doesn’t improve.”
The Reporting of Payment Practices and Performance Regulations 2017 requires large companies (as from April 2017) to report on their payment practices. This includes providing information about their standard payment terms and proportion of invoices which are paid late.
Professor Klein hopes that this data will give public sector procurers sufficient evidence on which to base their decisions to exclude poor payers: “Public sector procurers must also up their game to ensure they pay on time. Furthermore I now would expect the whole of the UK public sector to follow suit and proactively challenge payment abuse.”
The Specialist Engineering Contractors’ (SEC) Group – representing the largest sector of UK construction (by value) – said that such measure was long overdue and urged Government to act upon it. SEC Group’s CEO Professor Rudi Klein added:
“For some years we have been advocating a yellow/red card policy for public sector procurement. In other words poor payers should be warned about their payment performance and then banned from public sector contracts if their performance doesn’t improve.”
The Reporting of Payment Practices and Performance Regulations 2017 requires large companies (as from April 2017) to report on their payment practices. This includes providing information about their standard payment terms and proportion of invoices which are paid late.
Professor Klein hopes that this data will give public sector procurers sufficient evidence on which to base their decisions to exclude poor payers: “Public sector procurers must also up their game to ensure they pay on time. Furthermore I now would expect the whole of the UK public sector to follow suit and proactively challenge payment abuse.”
