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Private Sector Challenged Over Prompt Payment

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The public sector pay promptly drive is making a real difference to its suppliers' cash flow, according to the Government.

Nineteen out of twenty central government invoices are now paid within ten days - a 24% improvement on November 2008.

And the wider public sector has also seen improvements in payment performance.  The Forum of Private Business reported this month that the average payment time for local authorities in England is now eighteen days, with 42% of all invoices paid within ten days.

The Government has now thrown down the gauntlet to the private sector to pay promptly too.  Twenty-two of the FTSE 100 have so far signed up to the Government's Prompt Payment Code, launched by Peter Mandelson in December 2008.  They are joined by over 640 other signatories, all committed to ensuring they pay suppliers within agreed terms.

Writing to the FTSE 100 companies not yet signed up to the Code, Business Minister Mervyn Davies said:

"Late payment creates uncertainty in the supply chain and carries a significant cost to UK business.  In 2009, it is anticipated that UK business will pay approximately £180 million in interest on overdue payments.  That's £180 million of potential investment lost.  Being a Code signatory sends a very simple but very powerful message - we pay on time."

"Visible leadership on prompt payment by Government and our most influential companies is important to small business.  Government is playing its part - but every part of the supply chain must help ensure prompt payment."

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