back to article prompt payment promise is POPPYCOCK - NAO

Government is falling short in its commitment to settle debts with SME suppliers inside 30 days, putting some cash-strapped firms at risk of making redundancies. A report by the National Audit Office revealed central government spends £40bn a year on goods and services, of which about £4.5bn is spent directly with SMEs. An …

  1. Warm Braw

    Nothing changes...

    I had to delay the winding up of my SME business some years ago (not because of insolvency, because I'd had enough...) for more than four months while waiting for outstanding payments on a completed contract from a government agency that promised 30 day terms. The interest they were contractually supposed to pay on overdue payments never materialised.

    Mind you, that pales into insignificance compared with the time it can take the European Commission to come up with cash...

  2. Arachnoid

    Its nothing new

    It seems the bigger the company the longer they seem to keep small suppliers who may live of proceeds month to month,waiting for their invoice to be paid .Complaints will usually be met with the if you dont like it we will get someone else to supply us.

  3. John Smith 19 Gold badge

    It used to be *worse*

    Back in the day SOP in the construction industry was to force suppliers into bankruptcy to avoid payment.

    This is no longer legal as AIUI the debt is still owed to the liquidators.

    I'm all for companies charging interest. It's maximum level is not usury but it's enough to stop big companies not using you like their personal bank, which is in effect what is happening.

  4. xyz Silver badge

    Yup, another bloke who had to wait 4 months

    Back in 2008-2010, you slapped an invoice in and had it paid in about 7 days. Now that everything has to be Maude-ified (gettit, gettit) you have to threaten to MCOL the bastards to get the cash out of them.

  5. WatAWorld

    How many layers of intermediaries on average between contracting company and company doing the work?

    "The NAO noted, however, that most large government suppliers are already 'supplied by several tiers of smaller subcontractors.'"

    Does this mean several layers of intermediaries (middlemen) skimming the profits off before the money gets to the contractors actually doing the work?

    Is it layers of sales companies chopping one huge contract up into progressively smaller contracts, before getting to the point where the contracts are small enough for companies with the technical expertise to actually do the work?

  6. Old_timer

    We came close to suffering by being sub-contracted by a company supplying a Gov't department. We told them our standard terms and they replied that their terms were 90 days. Fortunately we can afford to tell such customers to go and get stuffed.

    However, there's another factor that the Gov't needs to consider if it's serious about having 25% of spend on SMEs. The hoops that you have to jump through in terms of have having these policies and those procedures in place etc. are ridiculous. It got to the point some years ago where we decided it simply wasn't worth the effort of trying to get contracts with local or national Government. Our experience was that the effort put in was wasted because there was little chance of success and they made much greater demands than commercial organisations.

  7. Bluenose

    Whose fault is this?

    The following is taken from the CCS model contract (framework agreement) which is used as the basis for all current Govt framework agreements including IT and is publicly available on the CCS website:

    23.2.1 The Supplier shall ensure that all Sub-Contracts contain a provision:

    (a) requiring the Supplier to pay any undisputed sums which are due from the Supplier to the Sub-Contractor within a specified period not exceeding thirty (30) days from the receipt of a valid invoice; and

    So the Framework that suppliers sign requires them to include this in their contracts and the clause goes further insisting that the Supplier tell the Govt when they have not met the 30 days limit and gives the Govt the right to publicise this failure and still this is an issue??

    The problem here that the NAO really needs to highlight is that Govt Contract Managers do not enforce the contracts they sign and CCS waste time putting clauses in to contracts that they never enforce. Perhaps if Civil Servants did their job things might change.

  8. Andrew Meredith

    Not worth it

    Having worked for a firm that dealt with the NHS and observed the chaotic way they behave wrt suppliers, and then started into the process of dealing with local government when I ran my own firm, I decided that the long invoice delays, the unbelievable levels of red tape and their propensity to change their minds every verse end about what you were even there to do; I concluded that it is simply too expensive to do business with the public sector if you are a firm anything smaller than several hundred.

  9. The Godfather

    Come on peeps...

    Anything like the 'prompt payment code' initiated by Government is a load of bollocks. It just gets few headlines and gets buried...

    Having said that, small or not have the balls to say no to 90 days or increase the charge accordingly to carry the cost.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Other stories you might like