Prompt payment - Revision history

Designing Buildings at 08:00, 21 October 2022

2022-10-21T08:00:28Z

← Older revision		Revision as of 08:00, 21 October 2022
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	For more information see: Prompt payment code.		For more information see: Prompt payment code.
		+
		+	= 2022 Procurement Bill =
		+
		+	The 2022 post-Brexit Procurement Bill includes provisions to establish 30-day payment within the public sector by:
		+
		+	* ensuring 30-day payment will be a mandatory implied term into tier 1, 2 and 3 construction contracts – overriding any other payment terms within relevant contracts (widely regarded as a milestone achievement); and
		+	* requiring public sector procurers to report on their payment performance in the same way as the private sector.
		+
		+	Should the new provisions be enacted as currently proposed, non-compliance would then be dealt with by the Public Procurement Review Service, supported by the Small Business Commissioner.

	= Related articles on Designing Buildings =		= Related articles on Designing Buildings =

Designing Buildings at 10:43, 28 December 2021

2021-12-28T10:43:17Z

← Older revision		Revision as of 10:43, 28 December 2021
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	= External references =		= External references =

−	* [http://www.promptpaymentcode.org.uk/ Prompt Payment Code].
	* [https://www.gov.uk/government/news/government-and-industry-join-together-to-tackle-late-payment Government and industry join together to tackle late payment] 28 October 2014.		* [https://www.gov.uk/government/news/government-and-industry-join-together-to-tackle-late-payment Government and industry join together to tackle late payment] 28 October 2014.
	* 2013 BIS discussion paper: [https://www.gov.uk/government/consultations/late-payment-of-finance-building-a-responsible-payment-culture Building a Responsible Payment Culture].		* 2013 BIS discussion paper: [https://www.gov.uk/government/consultations/late-payment-of-finance-building-a-responsible-payment-culture Building a Responsible Payment Culture].

	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:DCN_Policy]] [[Category:Contracts_/_payment]]		[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:DCN_Policy]] [[Category:Contracts_/_payment]]

Editor at 12:12, 9 December 2021

2021-12-09T12:12:35Z

← Older revision		Revision as of 12:12, 9 December 2021
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	For more information see: Prompt payment code.		For more information see: Prompt payment code.

−	= Related articles on Designing Buildings ~~Wiki~~ =	+	= Related articles on Designing Buildings =

	* Cash flow.		* Cash flow.
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	* Project bank accounts.		* Project bank accounts.
	* Prompt payment code.		* Prompt payment code.
		+	* Prompt Payment Code boosted to help SMEs.
	* Remedies for late payment.		* Remedies for late payment.
	* Scheme for construction contracts.		* Scheme for construction contracts.

Editor at 11:39, 17 June 2021

2021-06-17T11:39:40Z

← Older revision		Revision as of 11:39, 17 June 2021
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	* Construction client's charter.		* Construction client's charter.
	* Construction supply chain payment charter.		* Construction supply chain payment charter.
		+	* Economic upturn masks mental health crisis in 2021.
	* Fair payment practices.		* Fair payment practices.
	* Housing Grants, Construction and Regeneration Act.		* Housing Grants, Construction and Regeneration Act.

Editor at 15:32, 8 June 2021

2021-06-08T15:32:37Z

← Older revision		Revision as of 15:32, 8 June 2021
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	* Insolvency.		* Insolvency.
	* Main contractor’s discount.		* Main contractor’s discount.
		+	* Net zero commitment will be required for major government contracts.
	* Pay less notice.		* Pay less notice.
	* Payment notice.		* Payment notice.

Designing Buildings at 08:05, 14 February 2021

2021-02-14T08:05:42Z

← Older revision		Revision as of 08:05, 14 February 2021
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	* 2013 BIS discussion paper: [https://www.gov.uk/government/consultations/late-payment-of-finance-building-a-responsible-payment-culture Building a Responsible Payment Culture].		* 2013 BIS discussion paper: [https://www.gov.uk/government/consultations/late-payment-of-finance-building-a-responsible-payment-culture Building a Responsible Payment Culture].

−	[[Category:Contracts_/_payment]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:DCN_Policy]] [[Category:Contracts_/_payment]]

Designing Buildings at 11:55, 28 November 2019

2019-11-28T11:55:13Z

← Older revision		Revision as of 11:55, 28 November 2019
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	Prompt payment is the settling (paying) of invoices and bills within an acceptable time period that is usually set by a contract or party that requires payment (the supplier). Paying on time is regarded as good business practice.		Prompt payment is the settling (paying) of invoices and bills within an acceptable time period that is usually set by a contract or party that requires payment (the supplier). Paying on time is regarded as good business practice.

−	The demand for payment is usually made by sending the client an invoice which usually states the payment period and may include other payment details. A subcontractor having supplied services to a contractor may require payment within 30, 60 or 90 days, depending on the firm involved, or on the contract to which they ~~were originally party to~~.	+	The demand for payment is usually made by sending the client an invoice which usually states the payment period and may include other payment details. A subcontractor having supplied services to a contractor may require payment within 30, 60 or 90 days, depending on the firm involved, or on the contract to which they agreed.

−	Many firms pay within the agreed time period~~. However~~, some have a culture of late payment which can cause the supplier cash-flow problems, especially if it is a small firm. Some operators, having agreed to specific payment terms, may seek to change the terms retrospectively~~. However, in the five years to 2019, the amount owed to smaller businesses in late payment has more than halved~~.	+	Many firms pay within the agreed time period, however, some have a culture of late payment which can cause the supplier cash-flow problems, especially if it is a small firm. Some operators, having agreed to specific payment terms, may seek to change the terms retrospectively.

	= Steps to alleviate the late payment problem =		= Steps to alleviate the late payment problem =
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	The Government has taken various steps to tackle the problem in both private and public sectors. In November 2018, it announced that ‘any organisation that bids for a central government contract in excess of £5 million a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain’.		The Government has taken various steps to tackle the problem in both private and public sectors. In November 2018, it announced that ‘any organisation that bids for a central government contract in excess of £5 million a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain’.

−	~~As part of this, organisations~~ who want to do business with government must pay 95% of all supply chain invoices within 60 days. ~~Suppliers who do not comply with this standard could be prevented from winning~~ government contracts.	+	Organisations who want to do business with the government must pay 95% of all supply chain invoices within 60 days. From 1 September 2019, organisations bidding for government contracts in excess of £5 million a year may be required to provide:

−	~~Under the government’s scheme, from 1 September 2019, organisations bidding for government contracts in excess of £5 million a year may be required to provide:~~	+	* Confirmation they have systems in place to ensure that organisations in their supply chain are paid on time, including that they have procedures for resolving disputed invoices promptly and effectively.
−		+
−	* Confirmation they have systems in place to ensure that organisations in their supply chain are paid on time, including that they have procedures for resolving disputed invoices promptly and effectively~~; and~~	+
	* Details about their payment performance, including the percentage of invoices paid within 60 days.		* Details about their payment performance, including the percentage of invoices paid within 60 days.

−	Firms not meeting the required standard~~, in order to proceed, will be~~ required to provide an action plan which sets out the reasons why and the steps they are taking to get back on track.	+	Firms not meeting the required standard are required to provide an action plan which sets out the reasons why and the steps they are taking to get back on track.

−	~~= Setting~~ the ~~standard =~~	+	To set a good example, the government has committed under its Prompt Payment Policy to pay 90% of undisputed and valid invoices from SMEs within five days and 100% of all undisputed and valid invoices within 30 days. Government departments are required to report their performance against these payment targets on a quarterly basis.

−	~~To set a good example,~~ the ~~government’s commitment under its Prompt Payment Policy is to pay 90%~~ of undisputed and valid invoices from SMEs within five days and 100% of all undisputed and valid invoices to be paid within 30 days. Government departments are required to report their performance against these payment ~~targets on a quarterly basis on GOV.UK.~~	+	Other attempts to tackle the problem of late payment have included:

−	~~Other attempts to tackle the problem of late payment have included the~~ Housing Grants, Construction and Regeneration Act~~, the~~ Construction Supply Chain Payment Charter~~, the introduction of project~~ bank accounts ~~and the Prompt Payment Code~~.	+	* The Housing Grants, Construction and Regeneration Act.
		+	* The Construction Supply Chain Payment Charter.
		+	* Project bank accounts.

	= The Prompt Payment Code (PPC) =		= The Prompt Payment Code (PPC) =

−	Administered by the Chartered Institute of Credit Management (on behalf of the Department for Business, Energy and Industrial Strategy (BEIS)), the PPC sets standards for payment practices and best practice. Compliance with the principles of the Code is monitored and enforced by the Prompt Payment Code Compliance Board. The Code covers prompt payment, as well as wider payment procedures. Its three core tenets are:	+	Administered by the Chartered Institute of Credit Management (on behalf of the Department for Business, Energy and Industrial Strategy (BEIS)), the PPC sets standards for payment practices and best practice. Compliance with the principles of the Code is monitored and enforced by the Prompt Payment Code Compliance Board. The Code covers prompt payment, as well as wider payment procedures.
		+
		+	Its three core tenets are:

	* Pay suppliers on time		* Pay suppliers on time
	* Give clear guidance to suppliers		* Give clear guidance to suppliers
	* Encourage good practice.		* Encourage good practice.
		+
		+	For more information see: Prompt payment code.

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =
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	* Cash flow.		* Cash flow.
	* Causes of construction disputes.		* Causes of construction disputes.
−	* Collaborative practices.
	* Construction client's charter.		* Construction client's charter.
	* Construction supply chain payment charter.		* Construction supply chain payment charter.

Editor at 21:12, 17 October 2019

2019-10-17T21:12:59Z

← Older revision		Revision as of 21:12, 17 October 2019
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		+	= Introduction =
		+
	Prompt payment is the settling (paying) of invoices and bills within an acceptable time period that is usually set by a contract or party that requires payment (the supplier). Paying on time is regarded as good business practice.		Prompt payment is the settling (paying) of invoices and bills within an acceptable time period that is usually set by a contract or party that requires payment (the supplier). Paying on time is regarded as good business practice.

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2019-10-17T21:12:30Z

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Prompt payment is the settling (paying) of invoices and bills within an acceptable time period that is usually set by a contract or party that requires payment (the supplier). Paying on time is regarded as good business practice.

The demand for payment is usually made by sending the client an invoice which usually states the payment period and may include other payment details. A subcontractor having supplied services to a contractor may require payment within 30, 60 or 90 days, depending on the firm involved, or on the contract to which they were originally party to.

Many firms pay within the agreed time period. However, some have a culture of late payment which can cause the supplier cash-flow problems, especially if it is a small firm. Some operators, having agreed to specific payment terms, may seek to change the terms retrospectively. However, in the five years to 2019, the amount owed to smaller businesses in late payment has more than halved.

= Steps to alleviate the late payment problem =

Whether in private or public sectors, late payment can be a huge problem, especially for small firms which are the backbone of the UK economy. In the construction industry, where late payment has generally been a problem historically, a survey of 250 small construction companies in November 2012 found that 97% felt unfairly treated by main contractors, and just 5% of all work was paid for within 30 days.

The Government has taken various steps to tackle the problem in both private and public sectors. In November 2018, it announced that ‘any organisation that bids for a central government contract in excess of £5 million a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain’.

As part of this, organisations who want to do business with government must pay 95% of all supply chain invoices within 60 days. Suppliers who do not comply with this standard could be prevented from winning government contracts.

Under the government’s scheme, from 1 September 2019, organisations bidding for government contracts in excess of £5 million a year may be required to provide:

* Confirmation they have systems in place to ensure that organisations in their supply chain are paid on time, including that they have procedures for resolving disputed invoices promptly and effectively; and
* Details about their payment performance, including the percentage of invoices paid within 60 days.

Firms not meeting the required standard, in order to proceed, will be required to provide an action plan which sets out the reasons why and the steps they are taking to get back on track.

= Setting the standard =

To set a good example, the government’s commitment under its Prompt Payment Policy is to pay 90% of undisputed and valid invoices from SMEs within five days and 100% of all undisputed and valid invoices to be paid within 30 days. Government departments are required to report their performance against these payment targets on a quarterly basis on GOV.UK.

Other attempts to tackle the problem of late payment have included the Housing Grants, Construction and Regeneration Act, the Construction Supply Chain Payment Charter, the introduction of project bank accounts and the Prompt Payment Code.

= The Prompt Payment Code (PPC) =

Administered by the Chartered Institute of Credit Management (on behalf of the Department for Business, Energy and Industrial Strategy (BEIS)), the PPC sets standards for payment practices and best practice. Compliance with the principles of the Code is monitored and enforced by the Prompt Payment Code Compliance Board. The Code covers prompt payment, as well as wider payment procedures. Its three core tenets are:

* Pay suppliers on time
* Give clear guidance to suppliers
* Encourage good practice.

= Related articles on Designing Buildings Wiki =

* Cash flow.
* Causes of construction disputes.
* Collaborative practices.
* Construction client's charter.
* Construction supply chain payment charter.
* Fair payment practices.
* Housing Grants, Construction and Regeneration Act.
* Insolvency.
* Main contractor’s discount.
* Pay less notice.
* Payment notice.
* Progress on poor payment practices.
* Project bank accounts.
* Prompt payment code.
* Remedies for late payment.
* Scheme for construction contracts.
* The Late Payment of Commercial Debts Regulations 2013.

= External references =

* [http://www.promptpaymentcode.org.uk/ Prompt Payment Code].
* [https://www.gov.uk/government/news/government-and-industry-join-together-to-tackle-late-payment Government and industry join together to tackle late payment] 28 October 2014.
* 2013 BIS discussion paper: [https://www.gov.uk/government/consultations/late-payment-of-finance-building-a-responsible-payment-culture Building a Responsible Payment Culture].

[[Category:Contracts_/_payment]]