Prompt payment policy

PromptLearn Paymentabout inthis Government Contractingpolicy

Government

Prompt ensurepayment aguidance reliablefor supplygovernment chain.

buyers

AsThe agovernment partaims to pay 90% of this,undisputed governmentand hasvalid setinvoices afrom standardsmall ofand 95%medium-sized enterprises (SMEs) within 5 days. Additionally, 100% of all supplyundisputed chainand valid invoices toshould be paid within 6030 daysdays. 

Public forsector organisationsbuyers whomust wantincorporate to30-day dopayment businessterms within government.new Supplierspublic whosector docontracts. notAdditionally, complythey withmust ensure that this standardpayment couldterm beis preventedpassed fromdown winningtheir governmentsupply contracts.chain. 

What

Government isdepartments expectedare ofrequired suppliers?

FromView 1government Septemberpayment 2019,performance.

Read organisationsthe biddinglatest guidance for central government contractsdepartments inon excessprompt ofpayment £5policy millionand athe yearpublication mayof bepayment required to provide:statistics. 

• confirmation

  Prompt thatpayment guidance for government suppliers

  If you haveare systemsa insupplier placewho sells goods and services to ensuregovernment thatdepartments, organisationsit’s inimportant yourto supplyknow chainabout arethe paidPrompt onPayment time,Guidance includingpolicy. thatFrom youSeptember have1, procedures2019, any supplier bidding for resolvinga disputedcentral invoicesgovernment promptlycontract andabove effectively;£5 and

• detailsmillion aboutper youryear must demonstrate that they have effective payment performance,systems. 

  In includingaddition, thesuppliers percentagemust ensure that 95% of invoices in their supply chain are paid within 60 days.

IfStarting youfrom areApril not1, meeting2024, theall requiredsuppliers standard,must inalso orderensure tothat proceed,they youpay willtheir beinvoices requiredwithin an average of at least 55 days.

How to providedemonstrate an actioneffective planpayment whichsystem

To setsshow outthat theyou reasonshave whyan andeffective thepayment stepssystem, yoursuppliers organisationmust isensure takingthat tothey getcan backdemonstrate onthat track.they:

• pay at least 95% of invoices within 60 days. 
• pay their invoices within an average of at least 55 days

Large businesses are already required to publish their payment performance under the Reporting on Payment Practices and Performance Regulations 2017. You can submit these reports as part of your bid to demonstrate that you aremeet meeting the required standard.

Procurement Policy Note 04/1910/23 explains to departments how to take account of a supplier’s payment systems to demonstrate that it has a reliable supply chain.chain. 

Actions

Non-compliance supplierswith shouldthe take now

• Ensure

  Suppliers yourmust organisationfulfil isboth publishingcriteria paymentin reportsat whereleast required.one Checkof herethe totwo seeprevious ifsix-month youreporting needperiods, tofailing publishwhich athey report.

• Readwill PPNmeet 04/19the totechnical understandcriteria howat departmentsselection willstage and be implementingunable theto changesbid fromfor 1government Septembercontracts.

  If andsuppliers whatfail isto expectedpay 95% of youthe wheninvoices biddingwithin for60 relevantdays, governmentbut contracts.

Governmentstill Promptmanage Paymentto Policy

Thepay government90% commitmentof isinvoices toin paythis 90%time, ofthey undisputedare andrequired validto invoicessubmit froma SMEsdetailed withinaction 5plan daysoutlining andthe 100%steps ofto allget undisputedback andon validtrack. invoicesIf tothe besupplier paidalso pays invoices within 30an days.average Governmentof departmentsat areleast required55 todays reportin theirone performanceof againstthe thesetwo paymentprevious targetssix-month onreporting aperiods, quarterlythis basiswill onbe GOV.UK.

Readconsidered to meet the guidancecriteria.

Concerns paymentabout performance.

public procurement practices

SuppliersAlso, cansuppliers may claim statutory interest where a public sector buyer hasn’t paid an undisputed and valid invoice within 30 days (or any earlier payment date agreed in the contract). Interest is not paid automatically.automatically. 

Find out more about the Late Payment of Commercial Debts (Interest) Act 1998.

IfPrompt yourpayment businessguidance isfor owedprivate moneysector oncompanies

Companies not selling goods or services to government can also help improve supplier relationships by meeting prompt payment standards. 

The Prompt Payment Code is a voluntary code of practice for companies of any size. 

It sets standards similar to those in public sector contractcontracts when paying suppliers, with companies agreeing to:

TheCompanies Cabinetthat Officedo runsnot meet the government’srequirements Publicof the Prompt Payment Code may face investigation and removal from the Code.

From ServiceOctober which2024, enablesthe suppliersProcurement toAct reportwill poormandate that all public procurement practice,contracts includinginclude instancesa of30-day latepayment term, which is implied into contracts even if not explicitly written into them. This term will also extend to any subcontracts that are wholly or unfairsubstantially payment,meant into contribute to the performance of a public sectorcontract. contracts.This Followingchange itswill investigations,apply recommendationsto arethe madeentire andsupply findingschain. publishedInvoices onwill GOV.UK.have to be paid within 30 days of receipt, not when they are validated. 

UseFurthermore, contracting authorities will be required to publish Payments Compliance Notices every six months. The notices will detail the serviceauthority’s bycompliance completingwith paying invoices within 30 days of receiving the invoice. This will align public procurementsector reviewpayment servicereporting casewith requestthe form.private sector. 

Read more about how government is transforming public procurement.

The teamofficial willtransforming investigatepublic yourprocurement case.knowledge PPRSdrops haspage unblockedhelps overto £7.5understand millionthe inextended latemeasures paymentsfor sinceensuring 2015.prompt payment and more.

Helpful links

Prompt Payment Performance

Procurment Policy Notes 

Public Procurement Review Service

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