Guidance

Prompt payment policy

Information on measures introduced by the government to tackle late and unfair payment practices in the public sector.

Overview

Government is committed to making further improvements to payment practices across the public and private sector – with a particular focus on actions that support smaller businesses.

The Crown Commercial Service (CCS) is responsible for prompt payment policy for government and the public sector, and the Department for Business Innovation & Skills (BIS) is responsible for policy in the private sector.

We have made our own public pledge to support the prompt and reliable payment of invoices by signing up to the Prompt Payment Code.

Public Contracts Regulations 2015

Statutory guidance for public sector buyers and suppliers on paying undisputed, valid invoices within 30 days down the public sector supply chain came into force on 26 February 2015. Public sector buyers must pay prime contractors (Tier 1 suppliers) within 30 days and must ensure that their prime contractor includes equivalent 30 day payment terms in any subcontracts through the supply chain. In addition, public sector buyers are to start publishing annual payment performance data after March 2016.

Central Government Prompt Payment policy

The government restated its long-standing policy commitment to pay 80% of undisputed and valid invoices within 5 days with the remainder paid in 30 days. Government departments are now required to report their performance against these payment targets on a quarterly basis on GOV.UK. These new reporting requirements were announced in the Budget 2015

Read the guidance for central government departments on prompt payment policy and performance reporting in PPN 05/15

Electronic Invoicing

We are working with departments to introduce digital solutions to speed up the payment process to improve efficiency and save money on processing costs. Our work includes leading the rollout of electronic invoicing (e-invoicing) across government. Since June 2015 all central government departments have been required to accept unstructured e-invoices (invoices which can be sent in by email). We are also working towards greater use of structured e-invoices (invoices that can be processed automatically).

Late Payment of Commercial Debts (interest) Act 1998

Suppliers can claim statutory interest where a public sector buyer hasn’t paid an undisputed and valid invoice within 30 days (or any earlier payment date agreed in the contract). Interest is not paid automatically. BIS are responsible for this policy.

Prompt Payment Code

The government set out in its 2015 manifesto a commitment to strengthen the Prompt Payment Code and ensure all major government suppliers sign up to the code. The 32 suppliers targeted in 2015 have now signed up.

View the changes to the Prompt Payment code

Mystery Shopper Scheme

CCS runs the government’s Mystery Shopper scheme which enables suppliers to report poor procurement practice, including instances of late or unfair payment, in public sector contracts. Following its investigations, recommendations are made and findings published on GOV.UK

We encourage businesses to report instances of late or unfair payment in public sector contracts by contacting mysteryshopper@crowncommercial.gov.uk. CCS will then investigate.

View the cases that have been investigated through the Mystery Shopper scheme.

Published 20 November 2015
Last updated 13 July 2017 + show all updates
  1. Update to Prompt Payment Code supplier signatories.
  2. Updated link to view changes to prompt payment code.
  3. First published.