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Large firms should make prompt payments to smaller suppliers

The Government has called on larger companies to follow the example of public sector departments and to make sure they pay smaller businesses on time.

Those that currently provide goods and services to the Government but fail to pay their own suppliers promptly could be ‘named and shamed’.

Francis Maude, the Minister for the Cabinet Office, said: “Prompt payment is crucial to smaller companies. The Government has an excellent record on paying our bills quickly and we expect our suppliers to do the same and pay sub-contractors well within the 30-day limit. When work has been done, especially by an SME, it is just inexcusable not to pay up quickly for that service.

“We will be keeping a close eye on how the big suppliers choose to pay their sub-contractors and we won’t shy away from naming and shaming those that we find have failed to pay promptly.”

Mr Maude set out a series of measures aimed at encouraging on-time payments.

Departments will monitor the performance of prime contractors as part of their contract management processes.

SMEs will be encouraged to use the ‘mystery shopper’ service to blow the whistle in those instances where payments have been tardy, and the results will be published on the Cabinet Office website

And the Crown Representatives team, which coordinates the Government’s approach to the management of suppliers, will press prime contractors to pay more quickly than 30 days.

The Cabinet Office went on to point out that a number of measures have been set in place to boost the amount of government work that goes to smaller firms.

Some 14 Government departments have so far scrapped the burdensome Pre-Qualification Questionnaire process in the case of low value tenders.

The Contracts Finder website has received over a million page views and has over 16,000 registered users.

And since February of this year, 600 contracts worth over £80 million have been awarded to SMEs.