Conditions will apply from April 2024

Chancellor acts to improve payment terms at public sector suppliers

Policy change: "Some print managers are going to have to change the way they work"
Policy change: "Some print managers are going to have to change the way they work"

Jeremy Hunt’s Autumn Statement contained a new policy that could have a far-reaching – and positive – impact on parts of the industry.

Among the raft of measures introduced yesterday, the chancellor had this to say about SMEs and the issue of late payment.

In his section about SMEs, Hunt stated: “Next, small business. I ran my own one for 14 years and have always known that every big business was a small business once. The Federation of Small Businesses say that the biggest thing I could do to help their members is end the scourge of late payments. The Procurement Act we have passed means that the 30-day payment terms which are already set for public sector contracts will automatically apply throughout the sub-contract supply chain.

“But from April 2024 I will also introduce a condition that any company bidding for large government contracts should demonstrate they pay their own invoices within an average of 55 days, which will reduce progressively to 30 days,” he stated.

Slow or late payment is an enduring hot topic, and the recent revelation that marketing services firm ADM Group was implementing standard payment terms of a whopping 180 days has further ignited the debate in the printing industry.

A number of large marketing services and print management businesses currently hold public sector contracts that involve the print supply chain, although far as Printweek can ascertain, ADM is not one of them.

While the public sector element of these contracts is already subject to the 30-day payment terms requirement, it is not necessarily the case that the same terms apply across the whole business.

APS Global, which won the tender to run the Print Marketplace platform for the Crown Commercial Service, pays on 30 days for the public sector part of its operation. Printweek understands that standard terms at the wider group are 60 days.

Marketing services giant HH Global is an awarded supplier on a number of large public sector contracts, including the giant £420m Crown Commercial Service print management contract. Outside of the 30-day requirement, its standard payment terms are currently 90 days.

Sources told Printweek that standard terms at Williams Lea, which owns TSO (formerly The Stationery Office) were 60 days, while Paragon operated on 30 or 60 days.

Bicester-based Webmart, which paid its suppliers on seven day terms during the pandemic to help its supplier base cope with the crisis, operates on standard terms of 30 days end of month and will also make early payment for a discount. It is an awarded supplier on a number of public sector contracts.

Founder and executive chairman Simon Biltcliffe told Printweek: “Some print managers are going to have to change the way they work, both in how they deal with clients and suppliers.

“Often they are agreeing extended terms to win new clients (or keep existing ones) and then passing these long, or even longer ones, down the supply chain.”

IPIA general manager Brendan Perring noted that Hunt’s measures would need to have teeth.

“That’s a positive. But the reality is: how are you going to police it?” he said.

“It’s all well and good to say ‘we’re going to do this’, but how are you actually going to force people to pay, what’s the mechanism, what are the penalties? It’s only a benefit to printers if there is any actual structure behind it.

“If the government is able to produce a formal structure that has teeth and is able to enforce 30-day payment terms, that would be a benefit.”