The UK Government has announced that it has warned 10,000 businesses, including all of its strategic suppliers, that they must pay their suppliers on time or else they face being prevented from winning further government contracts.
Paul, CEO of Previse, the fintech which is working with a number of government departments to get their suppliers paid instantly believes large companies will struggle to speed up their payment processes.
Christensen commented on the matter, “Pressing more than 10,000 businesses to pay their suppliers faster is a welcome move which can potentially help improve the fortunes and cash flow of thousands of suppliers in the UK.
“Government procurement is worth £223 billion a year. Ending slow payments would be transformative for hundreds of thousands of suppliers. It will also stand as a powerful example to business and pressure large buyers to improve their own standards.
“Slow supplier payments can destroy SMEs and leave them without the cash they need to invest and grow their business. If the Government can deliver on this promise, it will be a big shot in the arm for British productivity and the economy.
“That said, making a commitment is one thing, delivery is another. Payment processes involve a lot of administration. Invoices have to be checked and cross-checked for errors or duplications, then inputted into various systems and passed between job functions to actually get paid. That can’t simply be sped up at the stroke of a ministerial pen.
“The Government and its contractors are going to need to think very carefully about how this promise can be delivered so that it becomes more than just tough talk.”