The Government is proposing changes to procurement law that would force all public contracting authorities to exclude firms that fail to meet the payment benchmark.<\/p>\n
The shake-up is aimed at stamping out late payment across the wider public sector and delivering better cashflow for small businesses.<\/p>\n
It builds on current rules for central government contracts, where suppliers must already pay 95% of invoices within 60 days, averaging 45 days overall.<\/p>\n
Under the new plan, the rules would apply to all invoices a business pays, not just those linked to public work.<\/p>\n
Contracting authorities would have to apply the new rule on a \u2018comply or explain\u2019 basis, giving them a get-out clause where excluding a bidder would reduce competition or value for money.<\/p>\n
The rule will initially only apply to payment records exceeding 60 days but Ministers will be given powers to lower that threshold in future to ratchet up pressure on poor payers.<\/p>\n