New requirement - payment of sub-contractors within 30 days

The OGC has recently published guidance on the new requirement (announced in the recent Budget) for all public contracts to include a requirement that suppliers of goods and services must pay their sub-contractors within 30 days. Note that the requirement does not apply to public works contracts.

The aim of the new requirement is to assist businesses in managing their cash flow and to give encouragement to small and medium sized companies whose need for prompt payment is likely to be greater.

The OGC provides suggested wording for the new clause as follows:

Where the Contractor enters into a sub-contract with a supplier or contractor for the purpose of performing its obligations under the Contract it shall ensure that a provision is included in such a sub-contract which requires payment to be made of all sums due by the Contractor to the sub-contractor within a specified period not exceeding 30 days from the receipt of a valid invoice.

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