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The Crown Commercial Service (CCS) has reported that 32 of the biggest government suppliers have voluntarily committed to pay 95 per cent of invoices within 60 days.
The signatories to the code, who together account for approximately 40 per cent of government procurement spend, are major strategic suppliers who typically have contracts across government of more than £100 million. The CCS is encouraging businesses to sign up to the Prompt Payment Code.
Small and medium-sized enterprises (SMEs) in the UK are collectively owed an estimated £26 billion in overdue payments. The voluntary code of practice publicly signifies organisations’ commitment to fair payment terms to suppliers, especially smaller businesses.
Emma Jones, Crown Representative for Small Businesses, addressed this point in saying the Prompt Payment Code is ‘welcome news to thousands of small business owners’. Over 80 per cent of undisputed invoices to SMEs are paid within five days, whilst the remainder are paid within 30 days.
The government is also encouraging all businesses, no matter the size, to sign up to the Prompt Payment Code, and will be appointing a Small Business Commissioner shortly.
Small Business Minister Margot James said: “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 £26 billion in overdue payments. Such unfair payment practices hamper a business’s ability to invest in growth, and have no place in an economy that works for everyone. It is only right that the government should lead by example, and it’s great to see all 32 of our strategic suppliers signed up and committed to fair payment terms.”
Caroline Nokes, Parliamentary Under Secretary of State at the Cabinet Office, added: “This is a major boost to payment practices in the UK. Paying invoices on time is vital in providing healthy cash flow to smaller businesses, to help them survive and thrive.”
Thanks to an ambitious government estate strategy, public sector organisations are under serious pressure to deliver smart working initiatives to drive down overheads.