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Public-sector and outsourced-service suppliers

Public bodies have to pay valid, undisputed invoices within 30 days, and since February 2025 that term is implied into the sub-contracts beneath a public contract too. The law times the invoice. It doesn't time the work before it: a milestone to be accepted, a purchase order to be matched, a call-off to be completed. For a supplier or subcontractor that stretch, paid for out of its own cash, is usually the real gap.

Tell us what's happening How money moves in this sector

How money moves

Thirty days, once there's an invoice to count from

A public contract has two clocks. The statutory one starts when a valid invoice is received. The one before it, getting from starting the work to having something the contract lets you invoice, runs on the contract's own milestones and sign-off, and the supplier funds it.

Reaching an invoiceBefore the clock

  1. Contract mobilised
  2. Work delivered against a milestone, order or call-off
  3. Milestone accepted or order matched
  4. Invoice can be raised

Getting paidIncome

  1. Invoice received
  2. 30 days, unless the buyer treats it as invalid or disputes it
  3. Paid

Running the contractCosts

  1. Payroll
  2. Materials and equipment
  3. Subcontractors

The law sets the timing of the second lane. The first lane and the costs beneath it are the supplier's to carry.

Under section 68 of the Procurement Act 2023, the 30 days run from the day the invoice is received or, if later, the day payment falls due under it. If the buyer considers an invoice invalid or disputes it, it has to tell the supplier without undue delay. Government's own prompt payment guidance is blunt about the old habit: invoices "will have to be paid within 30 days of receipt, not when they are validated".

Where the sector gets misread

What a generalist lender sees, and what's actually happening

What a generalist lender readsWhat is actually happening

A 30 day debtor book

The ledger only shows invoices. The weeks spent reaching an accepted milestone or a matched order sit before that, and never appear on an aged debt report.

A government customer, so no payment risk

Credit risk on a public body is usually low, but timing risk isn't. And a subcontractor's debtor is the prime or the tier above it, not the public body.

A thin-margin contractor always short of cash

Facilities management, security and cleaning contracts pay staff on fixed dates whatever stage the client's sign-off has reached. The squeeze is payroll against acceptance, not a weak business.

The measure that matters

Days from delivery to a payable invoice, not the payment term

For most public contracts the term itself is fixed by law, so it tells a lender very little. The useful numbers are how long each contract takes to go from starting work to an invoice the buyer has to pay, and how many tiers sit between the business and the public body.

The back half is checkable. Contracting authorities must publish Payments Compliance Notices every six months on paying invoices within 30 days, and large central government contractors are assessed on how quickly they pay their own suppliers, with the threshold set at an average of 45 days or fewer from 1 October 2025 (Prompt Payment Policy). The front half only shows up in the supplier's own contract records.

Where finance fits

A credit line for mobilisation, invoice finance once milestones are billed

Your situationUsually fitsNot this
Mobilising for a contract, before the first milestone can be invoicedA credit line sized for the mobilisation periodInvoice finance, with nothing yet to advance against
Invoices raised against accepted milestones or matched ordersInvoice financeA term loan for a gap that recurs with every milestone
A valid, undisputed invoice already past 30 daysRaise it under the contract, then with the Procurement Review UnitTreating a facility as the fix for a payment breach
A facility can fund the wait for a milestone to be signed off. It can't make a buyer or a prime keep to a 30 day term the law already implies.

Government's Procurement Review Unit handles cases about late payment of valid and undisputed invoices, and makes recommendations rather than binding rulings. Established Finance is an introducer, not a procurement adviser, so we can't chase a payment for you, only help fund the gap while it exists.

Sources

Where these points come from

Talk it through

Need another perspective?

Describe where things stand in a sentence or two: who pays, how, and where the gap sits. We'll tell you whether it's something we can help with. There's no charge for this.

Your enquiry is read by a person at Established Finance, not a call centre or an automated queue. We use it only to work out what's likely to fit and reply to you. We don't share your details with anyone else unless we introduce you to a specialist partner, and only with your agreement at that point. Sending this doesn't appoint anyone or create a professional engagement, and there's no obligation at any stage. See our privacy policy.

What happens next

  1. A person on our team reads it against how businesses in this sector are actually paid.
  2. If we can help, we introduce you to a specialist partner we have vetted and tell you who they are.
  3. No charge and no obligation at any point. You decide whether to go further.
Adam Parker

Adam Parker

Founder of Muswell Rose Consulting Ltd, which trades as Established Finance · former Managing Director of Penny, an invoice finance business, with 15+ years across mortgages, commercial finance and fintech lending.

Last updated:

Practical questions

Before you get in touch

What information do I need?

To start, just a description of what’s actually happening in the business. If it progresses, the specialist partner will ask for the usual things: recent accounts, a sense of turnover and trading history, and details of the specific need.