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Prompt Payment Code

The Prompt Payment Code requires firms to commit to pay 95% of supplier invoices within 60 days. Last year, several notable names in the construction industry were suspended from the code for failure to comply with this commitment. Whilst some companies have substantially improved their timely pay, we know delayed payments remain a major issue and strain on cash flow. 

Prompt Payments have again been a topic of discussion in the Cabinet Office with the focus on main contractors bidding for public work. This comes amid concern that the strain Covid-19 on cashflows could see main contractors revert to delayed payment practices.


From April 2021, the Cabinet Office will set a threshold requiring 85% of invoices to be paid in 60 days. Whilst the Government initially aimed to lock-out any contractor failing to pay 95% of invoices within 60 days, this expectation had to be reduced as the reality is the majority would fail the prompt payment test, largely due to industry standard payment terms. However, firms will be expected to demonstrate a compliant action plan is in place to meet the 95% standard in future to get this leeway.

With uncertain financial times upon us, this is a risk we all need to be prepared for with a plan to mitigate in place. A worthwhile investment to consider is Credit Insurance which will provide the reassurance that you are safeguarding your business from the risk of bad debt and knowing that should you have a problem supplier, your loss will be protected.

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