Clients told to do their bit as range of initiatives introduced to keep firms afloat

The Cabinet Office has told public sector clients to settle their bills with firms struggling to deal with the coronavirus outbreak as soon as possible.

In a note issued this afternoon (Friday), it outlined a series of measures clients must take in order to prevent firms going bust.

cabinet office

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It warned: “Many suppliers to public bodies will struggle to meet their contractual obligations and this will put their financial viability, ability to retain staff and their supply chains at risk.

“Contracting authorities must act now to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over.”

Among the initiatives it wants public sector clients to take are:

● 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

● 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)

● 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

● 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

● 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

It said the range of measures will start now and run until the end of June.