Direct payment scheme 'to offer major public procurement savings'

The government is set to make major savings from its procurement initiatives through a new direct payment system.

Plans have been unveiled by the Cabinet Office that will see all small and medium-sized enterprises (SMEs) in the construction sector receive their fee for state-commissioned construction work paid directly within five days of the due date.

This contrasts to the current system of payments being relayed via prime construction contractors, which can leave some smaller firms waiting up to 100 days before receiving their fee, reports Supply Management.

Cabinet Office minister Francis Maude said this construction industry drive is part of the government's wider efforts to increase efficiency and reduce the costs of public procurement.

"We are leading the way with this innovative approach to paying suppliers and where better to do so than in an industry where 99 per cent of businesses are SMEs?" he added.

This comes after the Cabinet Office announced last month that all central government procurements will need to be completed within 120 days moving forward, rather than the current average of 200.

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Categories: Central Government