Tough new rules on prompt payment come into force

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  • Big businesses must pay 95 per cent of their invoices in 60 days or run the risk of losing out on government contracts
  • New rules came into force on September 1
  • Minister says industry must develop a culture of prompt payment to support small businesses

Tough new rules designed to make sure government suppliers pay their bills on time have come into force.

The rules, which came in on September 1, mean all government suppliers must pay 95 per cent of their invoices within 60 days or run the risk of losing out on major government contracts.

This will be particularly beneficial for small businesses, who are an important part of the supply chain for many government suppliers.

The Minister for Implementation, Simon Hart, said:

Developing a prompt payment culture is critical for all companies helping to deliver vital public services.

And it’s particularly important for small businesses who may not have the reserves of larger organisations. That’s why we’re making it clear to big businesses that they must get their payment records in order or face the very real risk of missing out on large government contracts in the future.

The new rules were first announced by the Cabinet Office in November 2018.

Since then, there has been evidence of an improvement in payment rates by government suppliers, but the government has been clear that many businesses still need to do more.

The new rules have been backed by a wide range of business leaders and government suppliers.

Josh Hardie, the CBI’s Deputy Director-General, said:

Businesses know that strong supply chain relationships are the bedrock of a successful UK. Paying on time is at the heart of this – which is why companies welcome the Government’s efforts to support a culture of prompt payment.

Companies are already raising their game. These new rules – applied fairly and consistently – will further enhance the UK’s responsible payment culture.

Large businesses are already required to publish their payment performance every six months and the figures are published at: http://www.gov.uk/check-when-businesses-pay-invoices.

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