10 day payment pledge – the UK government support for the credit crunch

Prompt Payment Guidance for Public Sector Organisations

Do you work for any UK based government department, local authority, NHS or public funded body?  If so this article is for you.

Prompt public sector payments

I have recently completed some work for one of these organisations and they are now late with the payment – and so I am to two of my suppliers. One of them reminded me of the pledge last autumn for all gov departments to pay small business within 10 days – irrespective of the original terms of the contract. So I set about finding references to this. Unfortunately as I scanned the web I found lots of articles talking about it but none referring to it. Nor any official sites mentioning it.

I called the national Business Link number – they had not heard of the 10 day payment pledge and gave me the number of BERR – BERR made some effort but pointed me to the wrong thing altogether.

So with a little more digging I found the source. For your convenience you can download the original word letter or read it below (in case someone deletes it!).

New research from commercial credit reference agency Graydon UK, reveals today that last autumn’s Government pledge to ease the cash-flow problems faced by small firms through the payment by Government departments of trade invoices in 10 rather than the usual 30 days, is taking longer than expected to take effect.The survey, conducted during the first two weeks of March 2009, reveals that just 1 per cent of small businesses questioned, which are currently supplying Government agencies, are now receiving payments due to them within the pledged 10 day period. The results go on to show that over a third (39 per cent) of small firms said that they received payment from Government departments within 10 to 30 days, compared to 53 per cent who were paid within 30 to 60 days and 7 per cent after more than 60 days.

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It is a shame that while there was a lot in the press, the government and its support organisations have not done more to promote this initiative.

Businesses can, if the they wish, impose a fine of 5% of invoice value, plus interest, plus recovery costs, on public bodies who make late payments i.e. take longer than 30 days to pay an undisputed invoice.

—————–Original letter———–

Treasury Officer of AccountsDepartment logo

David Thomson

Central Finance Group

Rathgael House

Balloo Road


Tel No: 028 9185 8150 (x 68150)

email: david.thomson@dfpni.gov.uk

and jill.downie@dfpni.gov.uk

DAO (DFP) 12/08

27 November 2008

Dear Accounting Officer


Purpose of this letter

1. The purpose of this letter is to draw to Accounting Officers’ attention the need to ensure that all possible steps are taken by NICS departments and their agencies and their public bodies to pay suppliers in respect of valid invoices or from the receipt of goods/services (which ever is the later) as promptly as possible.


2. The NICS is committed to the Better Payments Practice Code, as set out in Annex 4.6 of Managing Public Money, and is subject to the Late Payment of Commercial Debt Regulations 2002. Payment is regarded as late if it is made outside the agreed terms, or 30 days after receipt of a valid invoice where no terms are agreed.

3. In response to the current economic position the Department for Business Enterprise and Regulatory Reform(BERR) announced on 21 October 2008 that

“ central Government has committed to paying businesses within 10 days – and we’re urgently speaking to the wider public sector to extend this commitment.”

4. This commitment to a prompt payment within 10 days is one that NICS should seek to support and therefore Accounting Officers’ are asked to ensure that all appropriate steps are taken within their Department and Agencies to support it.

5. In seeking to meet this objective Accounting Officers are asked to note that, whilst DFP has received confirmation from all financial system operators (Account NI, DE, DARD and DRD) that approved invoices are being released for payment without unnecessary delay, invoices may have been in a process, and taken a considerable period of time to reach the point of approval.

6. Departments must ensure that all invoice validation and checking has been completed correctly before invoices are authorised for payment. However, if the commitment to prompt payment is to delivered, departmental staff need to ensure that all necessary actions within the approval process, whether online in the case of Account NI or otherwise, are addressed without delay and, where invoices require clarification, appropriate action is taken quickly.

7. Departments, their agencies and NDPBs are required to report annually on performance against prompt payment. In order to demonstrate that they are meeting the commitment to prompt payment, reporting performance against the 10 day payment commitment should be on a more frequent basis (the regularity depending on the systems and processes in place).


8. This DAO is applicable to all NICS departments, their Agencies and Non-Departmental Public Bodies (NDPBs).


9. Departments should draw this letter to the attention of their agencies and NDPBs.


10. Any enquires regarding this letter should be addressed to Fiona Hamill, Deputy Treasury Officer of Accounts, Tel 028 91858128 (network 68128) email: fiona.hamill@dfpni.gov.uk.

Yours sincerely


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About Mike Morrison

Mike Morrison is founder of RapidBI
Mike is a consultant and change agent specialising in developing skills in senior people to increase organizational performance.
Mike is also founder & director of RapidBI, an organizational effectiveness consultancy.
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