The government understands the importance of prompt, fair and effective payment in all businesses. Being paid promptly for work carried out in accordance with the contract ensures businesses have a healthy cash flow throughout the supply chain, especially at the lower tiers.
To support the growth and inclusion of more SMEs in the delivery of public works projects, we need greater visibility of the public spending flowing down the supply chain. Suppliers should invest in automated, digital payment and contracting systems and processes. Digitisation will improve transparency, information exchange, payment performance and contract management across the supply chain.
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"To safeguard the delivery of public sector projects and programmes, it is critical that suppliers' economic and financial standing is considered during the selection process."
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The principle of paying promptly applies to all public procurement and all suppliers should pay their supply chain promptly. For contracts valued above £5 million per annum, departments and ALBs must include an assessment of a supplier's payment systems processes and performance as part of the selection process, to demonstrate it has a reliable supply chain, and determine when it would be appropriate to exclude suppliers that cannot demonstrate this. Further guidance can be found in PPN 04/19 and PPN07/20