Law to speed payments for smaller businesses

SME Market

Cabinet Office minister Francis Maude has revealed that new legislation will mandate 30-day payment terms throughout the supply chain for public sector contracts, in a bid to better protect SMEs from delays and improve cash flow. The Government was urged in January to improve payments to small companies after the National Audit Office found that a third of SMEs were not paid within 30 days for public sector work, and Whitehall departments were criticised for not doing enough to ensure suppliers down the line were being paid on time. The Government said it had met its target of increasing the percentage of public sector contracts awarded to SMEs to 25%, which represented £11.4bn in value. Mr Maude said in the financial year 2013-14, 26.1% of central government spending had gone to SMEs. However, only 10.3% was in the form of direct contracts: the remainder were indirect. Direct spending was 6.5% in 2009-10. Further announcements to improve the supply chain included a simplified bidding process and the abolishment of prequalification questionnaires for low-value contracts.


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