Do you bid for, or hold any Central Government Contracts? Why your payment terms for suppliers matter.


From 1 September 2019, any organisation that bids for a central government contract in excess of £5 million per annum will be required to provide information which will include the percentage of invoices paid within 60 days.


Any suppliers who are unable to demonstrate that they have effective systems in place and do not operate what the government consider to be a fair and responsible approach to payment of the supply chain, may be excluded from bidding from September 2019.


The government has a long standing policy to improve payment practices across the public and private sector – with a particular focus on actions that support smaller businesses. The Government statutory guidance for public sector buyers and suppliers on paying undisputed, valid invoices within 30 days down the public sector supply chain came into force on 26 February 2015.


The guidance states that Public sector buyers are required to pay prime contractors (Tier 1 suppliers) within 30 days and have to ensure that their prime contractor includes equivalent 30 day payment terms in any subcontracts through their supply chain.
Potential suppliers will need to answer questions about it supply chain management and payment tracking systems. This will include details about payment practices, processes and performance including the percentage of payments within 60 days. Any organisation that publishes data in accordance with the Reporting on Payment Practices and Performance Regulations, can submit this report as evidence part of any future bid.


As the assessment of payment practice will look at past performance, you may need to act now to ensure you are meeting the expected standard, if your organisation is likely to bid for central government opportunities in the future.


If your organisation is not currently meeting the expected standard and you are planning to bid for central government opportunities above £5m per annum from 1 September 2019, you should take actions now to improve your performance.

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