Businesses that fail to pay their suppliers on time could be prevented from winning future government contracts, officials have warned.
The government has sent more than 10,000 letters to business, which include all the government’s current strategic suppliers, reminding them of new rules on prompt payment, which come into force this autumn.
Minister for Implementation, Oliver Dowden, said: “Prompt payment is critical for all companies helping to deliver public services, particularly small businesses which are the backbone of our economy.
“That’s why, from September, if government contractors are late with supplier payments, they could be prevented from winning public contracts until they clean up their act.”
Under the new rules, suppliers who bid for government contracts above £5m per annum, who cannot show they are paying 95% of invoices within 60 days, risk being prevented from securing government contracts.
The new measures follow further moves to ‘level the playing field for small businesses’, according to the government.
It includes an ambition to pay 90% of the government’s undisputed invoices from SMEs within five days, and requiring strategic suppliers to advertise supply-chain opportunities worth more than £5m on the government’s Contracts Finder website.
Suppliers that are not being paid on time are also able to raise complaints and concerns directly to the government through the Public Procurement Review Service, formerly called Mystery Shopper.