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Government Demands You Pay Faster Too!

A Procurement Policy Note issued in March by the Office of Government Commerce requires government departments and non-governmental bodies over which the Government has direct control to pay its contractors within 30 days.

However, before hard-pressed suppliers heave a sigh of relief, the announcement is perhaps not such good news as one might think. Firstly, there are already signs that the 30-day target is being interpreted to mean ’30 days after the invoice is approved’, which in practice can be any amount of time.

Secondly, the pledge also contains a sting in the tail for contractors to governmental and other public bodies: it requires contractors to pay sub-contractors ‘within a specified period not exceeding 30 days from the receipt of a valid invoice’.

With a recent report from Experian showing that UK businesses pay bills 21 days late on average, complying with the Government’s 30-day target could present a significant challenge for many businesses.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.