A Procurement Policy Note issued in March by the Office of Government Commerce requires government departments and non-governmental bodies over which the Government has direct control to pay its contractors within 30 days.
However, before hard-pressed suppliers heave a sigh of relief, the announcement is perhaps not such good news as one might think. Firstly, there are already signs that the 30-day target is being interpreted to mean ’30 days after the invoice is approved’, which in practice can be any amount of time.
Secondly, the pledge also contains a sting in the tail for contractors to governmental and other public bodies: it requires contractors to pay sub-contractors ‘within a specified period not exceeding 30 days from the receipt of a valid invoice’.
With a recent report from Experian showing that UK businesses pay bills 21 days late on average, complying with the Government’s 30-day target could present a significant challenge for many businesses.