Improving prompt payment by government suppliers on public sector contracts

The CBI welcomes the opportunity to respond to this Crown Commercial Service consultation. Paying on time is a cornerstone of good business practice: it is essential to fair and successful working relationships, ensures businesses can support employment and create new jobs in local communities and across the country, and provides businesses the sound financial base they need to plan confidently for the future.

Yet beyond this, companies have a moral responsibility to pay fairly and transparently, being mindful of the impact their payment practices can have on businesses, staff and customers through their supply chain.

The overwhelming majority of firms recognise this and already strive to act accordingly. Yet with small and medium size businesses’ late payment debt sitting at £14.2bn, it is clear that payment practices continue to fall short of this vision in too many supply chains. This requires urgent action by business – not just because of the social and economic impact of late payment, but more importantly because paying promptly is the right thing to do.

Government can help make these necessary changes in behaviour happen by driving greater transparency of payment performance, making best use of existing measures to encourage improvements in performance, and leveraging its own purchasing power to cascade good practice through public sector supply chains.