The UK Government has announced that some of its biggest suppliers have signed up to a strengthened Prompt Payment Code that will help small businesses to be paid on time.
So far, 32 of its biggest suppliers have voluntarily committed to pay 95% of invoices within 60 days - and to work towards adopting 30 days as the norm. The signatories to the code are major strategic suppliers who typically have contracts across Government of more than £100m. Together they account for around 40% of Government procurement spend.
The Government says the move should help the cash flow of small businesses. It is estimated that small and medium-sized enterprises in the UK are collectively owed more than £26bn in overdue payments.
“We want the UK to be the best place in the world to start and grow a business, but the UK’s small-to-medium-sized businesses are currently owed over £26bn in overdue payments,” said Small Business Minister Margot James. “Such unfair payment practices hamper a business’s ability to invest in growth, and have no place in an economy that works for everyone.”
The announcement has been welcomed by the Federation of Small Businesses.
“It is good to see the Government fulfilling one of its manifesto pledges by getting big Government contractors to sign up to the Prompt Payment Code,” said FSB National Chairman Mike Cherry. “For far too long small businesses have been subjected to supply chain bullying and have been victims of the poor payment culture rife in the UK.”
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Contains public sector information licensed under the Open Government Licence v3.0.
