An article by Mike Barnes.
The current UK Government policy is for central government to pay 80% of undisputed invoices within 5 days. This is not a legal requirement. Legally suppliers can claim statutory interest for payments made more than 30 days after receipt of the invoice.
The contracting authority is obliged to pay invoices submitted by the contractor under the contract no later than the end of a period of 30 days from the date on which the invoice is regarded as valid and undisputed.
This was introduced to help businesses and in particularly SME’s with cash flow and whereas an SME may get paid quicker by a Government Department than the Private Sector, too often invoices are being paid outside the 30-day limit.
So if you are an SME dealing with a Central Government department, what can you do to help get your invoices paid quickly. Hopefully my “How to Guide” below will be of assistance.
If this is a one off purchase, then just follow the Steps below. If this is going to be a longer relationship, then it will be useful to have contacts in both the Purchasing & Finance Departments.
Make sure that the person you are talking to is authorised to purchase goods and services on the behalf of their organisation.
Before you commit to deliver goods/services obtain a Purchase Order number.
Ideally try and obtain a physical copy of the Purchase Order, before commencing any work.
Make sure that the price is correct on the Purchase Order. If not request an amended copy.
For goods always include a delivery note. If you are a service then it may be appropriate to obtain a receipt from the customer to indicate that the service was carried out successfully
Include the Purchase Order number on all your documentation (Delivery Note & Invoice)
Submit your invoice when the goods have been dispatched, preferably on the day that you know the goods will arrive at their destination.
Make sure the Invoice is sent to the address shown on the Purchase Order. If it accompanies the goods, which does happen, it likely to be lost.
If you are delivering services, then you need to ensure that the end user receipts the Purchase order.
If your Invoice matches the Purchase Order and the Receipt Documentation (3-way Match) then there should be nothing to prevent payment.
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