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Central Government Prompt Payment Measure

The Cabinet Office has asked us to help promote some important messages for the supplier community about the new government policy on late payment.

In November 2018, Oliver Dowden announced a new prompt payment initiativeto ensure all Government suppliers and subcontractors benefit from being paid on time. As a result of this, failure to demonstrate prompt payment to suppliers could result in companies being prevented from winning government contracts. This means paying 95 per cent of invoices within 60 days, or risk being excluded from the process.

The policy will come into force on 1 September and will apply to Central Government contracts in excess of £5 million. If a supplier bids for a contract on or after 1 September, they will be asked a series of questions about their supply chain management and tracking systems.

With a few months to go before the new policy comes into effect, now is the time for suppliers to review their payment practice and performance and ensure that when the policy takes effect they aren’t caught out. The main thing suppliers should be addressing is to ensure their payment practices and performance are meeting the expected standards. Large suppliers should already be reporting on their payment performance twice a year. If they are not meeting the expected standards, then it’s vital to make necessary improvements now, in time for when the policy comes into force.

For further information, suppliers can read the guidance issued to government buyers, plus the Government's new Crown Representative for SMEs has written this blog, published by the CBI.


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