The Government has announced that the failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts. The move is part of a new prompt payment initiative to ensure all Government suppliers and subcontractors benefit from being paid on time.
The new initiative will come into force in Autumn 2019, and will ensure the government only does business with companies who pay their suppliers on time.
Cabinet Office Minister, 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.
The Specialist Engineering Contractors’ (SEC) Group said that such measure was long overdue.
SEC Group’s Professor Rudi Klein said: “For some years we have been advocating a yellow/red card policy for public sector procurement. In other words poor payers should be warned about their payment performance and then banned from public sector contracts if their performance doesn’t improve.”