SMEs set for boost as government drafts laws for speeding up public sector contract payments

Thirty day payment mandate for public procurement contractors

Cash flow issues can be the death of small and medium-sized companies.

For firms seeking public sector contracts, help could soon be at hand.  

The government is aiming to help protect smaller firms involved in public procurement from late payments by implementing existing EU rules on the contracts.

According to the FT, cabinet minister Francis Maude said that new legislation could be introduced to mandate a minimum payment window of 30 days throughout the supply chain for public sector contracts.

The change would mean that even when the government pays contractors within 30 days, they must in turn pay sub-contractors within the allotted time-frame. Currently, many large firms delay paying their suppliers.

Speaking to the FT, Maude said: “The government was giving a huge cash flow boost, a working capital boost to larger companies.”

He also said that the procurement process would be simplified, and pre-qualification questionnaires would be abolished for lower value contracts.

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Readers' comments (1)

  • The introduction of a 30 day payment mandate will be welcome news for SMEs, but they should be aware that it relates to undisputed invoices. Accurate invoicing and a robust credit control system are vital to ensure that customers have all the information required to process payment eg accurate invoice POD, PO

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