Cabinet minister Francis Maude has said that the government will crack down on large contractors who do not pay their smaller suppliers on time.
The government has a number of large contractors, including IT firms Atos Origin, Oracle, Logica and Fujitsu.
Maude’s comments come as Bacs, the organisation behind Direct Debit and Bacs Direct Credit, published research that found that large companies were the worst offenders when it came to late payments to SME suppliers. In contrast, the public and third sectors are meeting more of their bills on time.
“We are delighted that this report shows that government is serious about keeping its commitment to paying suppliers (including SMEs) on time. We expect and require our suppliers to pay within 30 days. We will crack down on any behaviour to the contrary,” said Maude.
Bacs’ research shows that 53 percent of Britain’s SMEs have experienced late payment this year, up from 45 percent in June 2010. The average time the SME’s have to wait for beyond the agreed payment time, is 39 days, up by nearly eight days since June 2009.
A third of SMEs reported that big companies were the culprits behind the late payments, with SMEs in the manufacturing industry most likely to suffer a delay.
While the Forum of Private Business welcomed Maude’s statement of intent, it said that there needs to be a way for government to get contractors it pays on time to pass down the prompt payments to their smaller suppliers, and questioned how the government was planning to crack down on the late payers.
For example, it said that more awareness needs to be raised among sub-contractors about the government’s supplier’s feedback service that allows small businesses to report main contractors who fail to pass prompt payment down the supply chain.
“The government should also look into including a prompt payment requirement into the extensive pre-qualification questionnaires it requires contractors to complete before bidding for public sector work,” said Phil McCabe, spokesman for the Forum of Private Business.
Last year, the Forum of Private Business named Dell in its late payer ‘Hall of Shame’ after it extended the time it took to pay suppliers by 15 days, to 65 days.
Meanwhile, the government’s ICT strategy, published in March, committed the government to make procurement more attractive to SMEs and new providers by reducing bureaucracy around the process.