Many small firms are being put at risk by the poor payments practices that exist within public sector supply chains.
This is according to new data published by the Federation of Small Businesses (FSB), which is part of wider forthcoming research into how the UK can better use supply chains. The data reveals that nine out of ten (89%) public sector suppliers have been paid late. This is true both for suppliers to central government (88%), local government (91%) and those supplying to public infrastructure projects (91%).
While FSB has welcomed important steps announced by Government to widen access to public procurement, it is calling for urgent action to address late payments to those small businesses that have won government contracts.
FSB wants the Government to introduce penalties for departments, agencies and public bodies who fail to pay invoices on time. Additionally, departments, agencies and public bodies should be forced to automatically pay interest on any payments made later than contract terms.
“It is unfair and unacceptable that so many small firms, many of which are already struggling with the high cost of doing business, are also being forced to wait for money they are owed for work completed for the public sector,” explained FSB National Chairman Mike Cherry. “The Government needs to lead by example and ensure that small public sector suppliers are paid promptly on completion of their work. This starts with the Government and its strategic commercial suppliers, making sure that prompt payment is embedded throughout their supply chains.”
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