Contractors engaged in public sector projects across the UK will soon be subject to random and targeted spot checks on their payment practices.

This move by the UK government is designed to tackle the persistent issue of late payments throughout the construction supply chain.

According to advice issued by the Cabinet Office last Thursday (24 April), public sector bodies will be required, from 1 October 2025, to "conduct spot checks on invoices at random to deter non-compliance with the terms set out in the Procurement Act 2023". The guidance also states that authorities will have the power to conduct "targeted spot checks where an authority has assessed there to be an increased risk of poor performance." These checks will apply to all public sector projects valued at over £5 million.

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Daniel Elmer, senior policy advisor at the Cabinet Office, emphasised the importance of cash flow for businesses, stating: "We know strong cashflow builds resilience, and helps small companies to grow."

The Procurement Act 2023, which came into effect in February of this year, mandates 30-day payment terms across the entire public sector supply chain. Furthermore, the Act places a responsibility on contracting authorities to actively encourage the participation of Small and Medium-sized Enterprises (SMEs). A key provision of the Act clarifies that payment must be made within 30 days of a valid invoice being received, rather than the previous practice of 30 days from validation.

The National Federation of Roofing Contractors (NFRC) has welcomed the government's proactive measures to address the ingrained culture of late payment within the construction industry. The NFRC, a long-standing campaigner for the abolition of retention payments and an overall improvement in payment culture, views this initiative as a positive step forward. While acknowledging that further action is still needed, the NFRC believes it signals a clear commitment from the government to take the issue seriously.

The NFRC, which has been awarded the Gold Fair Payment Code badge, is actively encouraging other businesses within the construction sector to commit to timely payment practices. They argue that this would free up crucial cash flow and ultimately enhance productivity across the entire industry.