Tough new payment rules come into force
Tough new rules, first introduced by the Cabinet Office in November 2018, have come into force this month. The new rules mean that all government suppliers must pay 95% of their invoices within 60 days or run the risk of being excluded from the opportunity to bid for lucrative, taxpayer-funded government contracts. Federation of Small […]
Tough new rules, first introduced by the Cabinet Office in November 2018, have come into force this month. The new rules mean that all government suppliers must pay 95% of their invoices within 60 days or run the risk of being excluded from the opportunity to bid for lucrative, taxpayer-funded government contracts.
Federation of Small Businesses National Chairman Mike Cherry welcomed the news and the fact that it sends out a strong message that a late payment culture will not be tolerated within any government contracts. He went on to say, “We have worked very hard with the Cabinet Office to get to this moment. This will prevent another Carillion, where payment terms were lengthened as the company fell into difficulty, hoarded taxpayers’ money and tried to improve its cash flow off the back of its small suppliers.”
This move will hopefully be particularly beneficial for small businesses, who are a crucial part of the supply chain for many government contracts. The Minister for Implementation, Simon Hart, said, “Developing a prompt payment culture is critical for all companies helping to deliver vital public services. And it’s particularly important for small businesses who may not have the reserves of larger organisations. That’s why we’re making it clear to big businesses that they must get their payment records in order or face the very real risk of missing out on large government contracts in the future.”
There has been some evidence of an improvement in payment rates by government suppliers, but it is clear that more needs to be done to change the culture of late payment. Josh Hardie, Deputy Director-General of the CBI, said, “Businesses know that strong supply chain relationships are the bedrock of a successful UK. Paying on time is at the heart of this – which is why companies welcome the Government’s efforts to support a culture of prompt payment. Companies are already raising their game. These new rules – applied fairly and consistently – will further enhance the UK’s responsible payment culture.”
This is all welcome news for SMEs who have been trapped in the cycle of late payment. Cash flow problems are one of the leading causes of business failure and knowing that you are going to be paid within reasonable terms allows for more accurate financial planning and forecasting.
If your company is not part of the supply chain for these contracts how do you protect yourself from late payers? One way to protect your cash flow and provide financial stability is to have robust credit control systems in place. Partnering with an established and reputable firm who will white label these services for you, acting as a part of your business, can take the strain from your resources and free you up to allow you and your staff to focus on growing the business.
Daniels Silverman partner with a range of organisations of all sizes to help them manage their credit control. Acting as a part of your business, we give your clients polite and friendly reminders when invoices are about to fall due. We always act in a professional and ethical manner and we fully understand that your reputation needs to be at the heart of everything we do. It is crucial to ensure that you are paid on time for any work, product or services you provide. If clients are late paying their invoice, then we are on hand to have a conversation to find out why and see if we can resolve any problems and deal with any queries or disputes promptly. It is important to stop late payments becoming debts, the longer you have to wait the more difficult it can be to get paid.
If you would like to find out more about how partnering with Daniels Silverman could help to support your business then please do get in touch, we’d be happy to talk to you about how our services could help. You can contact to us via our website where we have staff waiting to talk or you can phone us to speak directly to someone.