Government Strengthens Payment Regulations for Contractors

Starting April 1, 2024, companies seeking government contracts exceeding £5 million must demonstrate prompt invoice payment within an average of 55 days. Failure to meet this criterion will result in exclusion. This updated obligation aligns with the Duty to Report, reflecting the government’s commitment to enhancing payment practices. 

 

Payment and Cash Flow Review report extends the Reporting on Payment Practices and Performance Regulations by seven years, acknowledging their positive impact on payment culture and transparency. The report recognises the role of industry efforts, such as payment performance table, in fostering improvements within the construction sector. New metrics will assess disputed invoices, unpaid invoices beyond terms, and retentions, accompanied by enhanced enforcement by the Department for Business and Trade. 

 

The Cabinet Office introduces PPN 10/23, reinforcing the payment criteria for government contract bidders. Starting April 1, 2024, companies must demonstrate a 55-day average invoice payment period, progressively reducing to 45 days in April 2025 and 30 days in subsequent years. This requirement supplements the existing mandate for companies to pay a minimum of 95% of invoices within 60 days (or 90% with an established ‘action plan’).