FPB urges public sector contractors to pay on time

A PUBLIC sector initiative to pay invoices within 10 days is not being passed on by main contractors to smaller suppliers, according to the Forum of Private Business (FPB).

The Knutsford-based pressure group said that although major contractors serving public sector bodies are typically paid within ten days, they are making subcontractors wait for much longer.

It recently took up the case of a Glasgow-based member firm which had to wait 60 days before it was paid by contractor Interserve Defence.

“For many smaller sub-contractors this is the real story behind the commitment to prompt public sector payment,” said the FPB’s head of policy, Matt Goodman.

“What is the point in main contractors being paid within 10 days if firms further along the supply chain have to wait considerably longer for their money?

The FPB used Freedom of Information legislation to establish that 97.5 per cent of all invoices recently issued to the Ministry of Defence had been paid within ten days. The MoD’s own guidelines stated that payments due to subcontractors should then be made within 30 days.

“The danger is that this is the tip of the iceberg – the issue is certainly not restricted to the any one sector,” said Goodman

“The risk is that that more firms go under because they are unable to maintain any kind of cash flow because of late payment from larger companies.”