Prompt Payment Policy Statement
Introduction to Prompt Payment in Government Subcontracting
UK Government announced in November 2018 that from 1 September 2019, any organisation that bids for a central government contract in excess of £5 million a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain.
As a part of this, government has set a standard of 95% of all supply chain invoices to be paid within 60 days for organisations who want to do business with government. Suppliers who do not comply with this standard could be prevented from winning government contracts and in accordance with this, the Company shall meet or exceed these UK Government standards.
What is expected of us?
From 1 September 2019, organisations bidding for government contracts in excess of £5 million a year may be required to provide:
- confirmation that we have systems in place to ensure that organisations in our supply chain are paid on time, including that we have procedures for resolving disputed invoices promptly and effectively; and
- details about our payment performance, including the percentage of invoices paid within 60 days.
If we do not meet the required standard, in order to proceed, we will be required to provide an action plan which sets out the reasons why and the steps our organisation is taking to get back on track, including but not limited to:
- Upstream risk managemet
- Risk profiling
- Discounting
- Legal recourse
Large businesses are already required to publish their payment performance under the Reporting on Payment Practices and Performance Regulations 2017. The Company can submit these reports as part of our bid to demonstrate that we are meeting the required standard.
Actions we have taken
Ensure our organisation is able to publish payment reports where required.
Read PPN 04/19 to understand how departments will be implementing the changes from and what is expected of we when bidding for relevant government contracts.
Government Prompt Payment Policy
The government commitment is to pay 90% of undisputed and valid invoices from SMEs within 5 days and 100% of all undisputed and valid invoices to be paid within 30 days. We undertake to match the government standard.
Through the Public Contract Regulations 2015, public sector buyers must include 30-day payment terms in new public sector contracts; and require that this payment term be passed down the supply chain. We intend to match this standard.
Suppliers can claim statutory interest against us where we have not paid an undisputed and valid invoice within 30 days (or any earlier payment date agreed in the contract). Interest is not paid automatically but accrues in accordance with the Late Payment of Commercial Debts (Interest) Act 1998.
If our business is owed money on a public sector contract
The Cabinet Office runs the government’s Public Procurement Review Service which enables suppliers to report poor procurement practice, including instances of late or unfair payment, in public sector contracts. Following its investigations, recommendations are made and findings published on GOV.UK.