In a move welcomed by business groups, the Government has introduced new prompt payment rules which will prevent poor payers from winning lucrative public sector contracts.
The initiative which was introduced on 1st September 2019 stipulates that any companies wishing to do business with government departments will have to pay 95% of all supply chain invoices within a 60 day period. As well as meeting these payment terms, businesses will have to demonstrate an effective payment system in order.
Mike Cherry, national chairman of the Federation of Small Businesses (FSB) commented, “We welcome the new administration taking ownership of the late payment crisis with this crucial step, sending a message that late payments will not be tolerated within government contracts. We have worked very hard with the Cabinet Office to get to this moment. This will prevent another Carillion, where payment terms were lengthened as the company fell into difficulty, hoarded taxpayers' money and tried to improve its cash flow off the back of its small suppliers. This move sends a message to the wider business community that the government is taking this seriously and those found in breach of the Prompt Payment Code from 1 September will be excluded from bidding for lucrative contracts."
The FSB will continue to work closely with the government to "drive out late payments". 2018 saw the FSB launch their Fair Pay Fair Play campaign . The Prompt Payment Code is administered by the Chartered Institute of Credit Management (CICM) on behalf of the department of Business, Energy & Industrial Strategy.
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