10 day pay promise not honoured through supply chain

13 July 2010

13 July 2010 | Angeline Albert

A pledge by the UK government to pay invoices within 10 days is not being passed on by main contractors to smaller suppliers, the Forum of Private Business (FPB) has discovered. 

Although official figures show most central government departments pay main contractors within 10 days, some sub-contractors and suppliers are still left waiting for payments for months after invoices are filed.

EG Heating and Plumbing, based in Glasgow, had to wait 60 days to be paid by its client – which it does not want to be named – which in turn was working for the main government contractor, Interserve Defence. The delay came despite Interserve Defence being paid by the Ministry of Defence (MoD) within 10 days. 

Eleanor Grant, owner of EG Heating and Plumbing, said: “While we welcome the commitment to reduce public sector payment terms, this doesn’t always work in practice.” She added:  “Why should we have to wait 60 days when the main contractor was paid within 10 days?”

EG Heating and Plumbing’s invoice had, however, been paid within its 60 day payment term. 

The FPB used Freedom of Information legislation to ask the MoD to provide details of payment times to suppliers. The MoD replied that it is “fully committed to paying 90 per cent of valid invoices” within 10 days and that since March 2009 it has consistently exceeded the target.

Latest figures from the MoD show that 97.5 per cent of invoices submitted by all suppliers were paid within 10 days of receipt. And main contractors’ payments to sub-contractors should be made “within a specific period not exceeding 30 days from receipt of a valid claim as defined by the sub-contract requirements”.

According to the financial clearing service Bacs,
 some £24 billion is owed to small businesses in late payments at any one time. Many suppliers are afraid to come forward to confront clients publicly or in the courts, it said.

* The FPB identifies poor payers in its Hall of Shame

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