Public Sector: Billing

Cabinet Office written question – answered on 6th November 2018.

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Photo of Lord Mendelsohn Lord Mendelsohn Labour

To ask Her Majesty's Government what is their assessment of the impact on small and medium-sized enterprises (SMEs) of the requirement to pursue claims against public authorities in the courts in order to claim statutory interest and compensation; and what plans they have to improve access to interest and compensation owed to SMEs by public authorities due to late payment.

Photo of Lord Mendelsohn Lord Mendelsohn Labour

To ask Her Majesty's Government what is their assessment of the impact of small and medium-sized enterprises assigning their rights to pursue late payment claims against public authorities for statutory interest and compensation.

Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office)

The Government understands the importance of prompt, fair and effective payment in all businesses, especially small and medium-sized enterprises (SMEs) who may not have the cash reserves of larger companies.

Suppliers can claim statutory interest where a public sector buyer has not paid an undisputed and valid invoice within the contractual payment terms, where the contract does not otherwise provide for the payment of interest.

Statutory guidance for public sector buyers and suppliers on paying undisputed, valid invoices within 30 days down the public sector supply chain came into force on 26 February 2015. Public sector buyers must include 30 day payment terms in all public contracts and must ensure that their prime contractor includes equivalent 30 day payment terms in any subcontracts through the supply chain.

The Government encourages businesses to report poor payment practice and instances of late payment in public sector contracts in breach of contract terms, including late payment in the supply chain, to its Mystery Shopper service.

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