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Prompt payment guidance for government buyers

The government aims to pay 90% of undisputed and valid invoices from small and medium-sized enterprises (SMEs) within 5 days. Additionally, 100% of all undisputed and valid invoices should be paid within 30 days. 

Public sector buyers must incorporateinclude 30-day payment terms in new public sector contracts. Additionally, they must ensure that this payment term is passed down their supply chain. 

Government departments are required to report their payment performance annually on GOV.UK in line with these targets.

View government payment performance.

Read the latest guidance for central government departments on prompt payment policy and the publication of payment statistics.

Prompt payment guidance for government suppliers

If you are a supplier who sells goods and services to government departments, it’sknowing important to know about the Prompt Payment Guidancepolicy policy.is important. From September 1, 2019, any supplier bidding for a central government contract above £5 million per year has needed to demonstrate that they have effective payment systems. 

To demonstrate this, suppliers must ensure that 95% of invoices in their supply chain are paid within 60 days and that they pay their invoices within an average of at55 leastdays 55or days.fewer.

How to demonstrate an effective payment system

To show that you have an effective payment system, suppliersyou must ensure thatyou they can demonstrate that they:you:

• pay at least 95% of invoices within 60 days
• pay theirall invoices within an average of at55 leastdays 45or daysfewer

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 meet the required standard.

Procurement Policy Note 018 explains how to take account of a supplier’s payment systems to demonstrate that it has a reliable supply chain.

Non-compliance with the policy

Suppliers must fulfil both criteria in at least one of the two previous six-month reporting periods. If they cannot do so, they will not meet the technical criteria at selection stage and be unable to bid for government contracts.

If suppliers fail to pay 95% of the invoices within 60 days, but still manage to pay 90% of invoices in this time, they must submit a detailed action plan outlining the steps to get back on track. If the supplier also pays invoices within an average of at least 4555 days in one of the two previous six-month reporting periods,periods at the same time, this will bemeet consideredthe criteria.

Spot checking

The Procurement Act 2023 introduced more stringent requirements to meetensure that suppliers in the criteria.public contract supply chain are paid within 30 days. From 1 October 2025, government departments must conduct regular ‘spot checks’ on contracts worth more than £5m per year to ensure smaller companies at lower tiers of the supply chain are being paid within 30 days. 

Departments will be publishing the results of their spot checks online and will take appropriate action if suppliers are not meeting the requirements under the Procurement Act 2023.

Procurement Policy Note 022 explains the spot checks policy in further detail.

Concerns about public procurement practices

The Public Procurement Review Service (PPRS) sits within the Cabinet Office and allows government suppliers and potential government suppliers to raise concerns anonymously about potentially poor public sector procurement practices.

If you have a concern you’d like to raise about a procurement process or a problem with payment on a public contract, you can let them know by sending an email to publicprocurementreview@cabinetoffice.gov.uk, and they will investigate for you.

PPRS reports on the trends in the issues raised and recommends how to improve. They also publish monthly results from their investigations.

Also, suppliers 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. 

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

Prompt payment guidance for private sector companies

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

The Fair Payment Code was launched in December 2024 and is a voluntary code of practice for companies of any size.

It sets standards similar to those in public sector contracts when paying suppliers and supports businesses improve their payment practices.

Companies that do not meet the requirements of the Fair Payment Code may face investigation and removal from the Code.

For more information please see the Small Business Commissioner’s website.

Implementing the Procurement Act

From 24 February 2025, the Procurement Act will mandate that all public procurement contracts include a 30-day payment term, which is implied in contracts even if not explicitly written into them. This term will also extend to any subcontracts that are wholly or substantially meant to contribute to the performance of a public contract. This change will apply to the entire supply chain. Invoices will have to be paid within 30 days of receipt, not when they are validated. 

Furthermore, contracting authorities will be required to publish Payments Compliance Notices every six months. The notices will detail the authority’s compliance with paying invoices within 30 days of receiving the invoice. This will align public sector payment reporting with the private sector. 

Read more about how government is transforming public procurement.

The official transforming public procurement knowledge drops page will help you to understand the extended measures for ensuring prompt payment and more.

Helpful links

Prompt Payment Performance

Procurment Policy Notes 

Public Procurement Review Service: scope and remit

Check when large businesses pay their suppliers