Partner Article

Use Procurement to tackle late payments say FPB

The Forum of Private Business is calling on the Government to use the public sector procurement process to tackle the problem of late payments.

Last week the Government announced plans to update its list of projects up for tender, which are worth a total of £70 billion to the UK economy.

The Forum believes that the Government should use these contracts as a tool to fight late payments by refusing to allow companies who take an unreasonable amount of time to pay invoices to be involved in the process.

Research indicates that more than half of all small businesses have been affected by late payments in the last year alone, with 16% saying that it has nearly put them out of business.

The Forum’s senior policy advisor Phil McCabe commented: “While we strongly support the Government’s plans to improve the public sector procurement process for the benefit of smaller private sector businesses, it would be extremely welcome if it were to ensure only those firms which pay their suppliers promptly are awarded these lucrative state contracts.

He believes that by doing this the Government would send a clear message to big businesses that late payment is unacceptable, and will not be tolerated.

He continued: “There really is the potential for massive impact here for very little effort and, after all, if government is paying primary contractors within 10 days, why should those same contractors not settle with their suppliers ASAP?

“By being a beacon of best practice and only using firms which respect the supply chain by paying their dues promptly, the Government would be demonstrating huge support for small business.”

The Forum have joined 17 other leading industry bodies in signing the Government’s ‘Procurement Pledge’, which aims to offer a more streamlined procurement process which will ensure that all but the most complex procurements are completed within 120 working days, making it easier, quicker and less costly for potential providers to access public procurement.

They have also suggested that the Government use pre-qualification questionnaires, which are part of the usual tender process, to identify which firms pay within an acceptable time frame and those who don’t.

Mr McCabe added: “It’s a win-win situation. Small businesses would not have to worry about managing cash flow issues, allowing them to concentrate better on moving their businesses forward.

“And the Government will be able to demonstrate it has used its position of power to help small business for once by adopting a common sense approach.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .