Business groups welcomed an announcement that companies who fail to demonstrate prompt payment to their suppliers could be prevented from winning Government contracts.

Government will not do business with late payersLate Payers

The Minister for Implementation, Oliver Dowden, has announced that from autumn 2019, the Government will only do business with companies that pay their suppliers on time, many of which are small businesses.

The Government’s press release says the initiative “will promote a healthy and diverse marketplace of companies providing public services.”

To demonstrate the Government’s commitment to helping small businesses, it will also be updating its supplier complaints service to ensure business voices are heard.

Formerly called Mystery Shopper, the Public Procurement Review Service is free and anonymous, helping suppliers of all sizes raise complaints and concerns about procurements they’re involved in or the conduct of contracting authorities. Since 2011, the service has helped speed up payment of over £5.2m stemming from Government contracts.

Oliver Dowden said:

“Paying invoices promptly is vital in providing healthy cash flow, particularly for smaller businesses who are the backbone of the UK economy, to help them survive and thrive.

“From next year, if government contractors are late with supplier payments, they could stop winning public contracts altogether – until they clean up their act.”

Martin McTague, policy and advocacy chairman for the Federation of Small Businesses (FSB), said the measure will “get the thumbs up” from the small business community.

“Cracking down on big businesses supplying to Government, and not paying on time, is a win for small businesses, tax payers, the wider economy and public services… We will continue to work with the Government on this and further measures to drive out late payment from Government supply chains once and for all.”

Opening up opportunities for small businesses

This latest initiative follows the other Government measures announced in recent months to level the playing field for small businesses bidding for government contracts. This includes the ambition to pay 90% of government’s undisputed invoices within 5 days and requiring suppliers to advertise opportunities worth over £5m on the Contracts Finder website.

Additionally, the Prime Minister has appointed a Small Business Champion minister in each government department to oversee a robust action plan to help us meet our aspiration of spending one pound in three with SMEs by 2022.

“Measures to open up public procurement give tax payers and our public services access to the innovation and value small firms bring, as well as helping our economy,” said Martin McTague.

James Roberts, political director of the TaxPayers’ Alliance, said making the process more small business friendly “delivers the double whammy of driving down costs and supporting enterprise… which will ultimately mean more competition, lower costs and better services.”

If you run a business and are interested in working on contracts worth over £10,000 with the Government or its agencies, you can search available contracts on these sites:

England: Contracts Finder

Scotland: Public Contracts Scotland

Northern Ireland: eSourcing NI and eTendersNI

Wales: Sell2Wales

What do you think of this scheme to clamp down on late payers? What else would you like to see the government doing? Please share your thoughts below.