If you supply the public sector you could be missing out on cash flow

22nd May 2020

Many businesses supply goods and services to the public sector in England or Wales.

If you have such customers, and they fall under the definition of a contracting authority (see below), then they are required to consider Procurement Policy Note 02/20 (PPN) which sets out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after the current coronavirus COVID-19 outbreak. 
This PPN is applicable to all contracting authorities, including central government departments, executive agencies, non-departmental public bodies (including academies), local authorities, NHS bodies and the wider public sector (excluding Devolved Administrations).

The PPN covers goods, services and works contracts being delivered. Full details can be found here.
The PPN states all contracting authorities should:

  1. Urgently review their contract portfolio and inform suppliers who they believe are at risk that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June. 
  2. Put in place the most appropriate payment measures to support supplier cash flow; this might include a range of approaches such as forward ordering, payment in advance/prepayment, interim payments and payment on order (not receipt). 
  3. If the contract involves payment by results then payment should be on the basis of previous invoices, for example the average monthly payment over the previous three months.
  4. To qualify, suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. They should continue to pay employees and flow down funding to their subcontractors.
  5. Ensure invoices submitted by suppliers are paid immediately on receipt (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.

There are additional requirements that need to be considered if the contract is for the delivery of a construction project.

The guidance on construction contracts can be found here.

There is also a very useful list of frequently asked questions which can be found here.

If you are not being paid in line with the PPN then please do contact me on 07812 352007 or ptuckett@bishopfleming.co.uk to discuss your specific circumstances. We also recommend that you contact your customer to discuss a way forward. 


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