Recruiters have been urged to check the finer detail of public sector contracts they are bidding for, despite new guidance from government aimed at smoothing the way for valid invoices to be paid within 30 days.

Yesterday, the government issued a guidance note relating to Regulation 113 of the Public Contracts Regulations 2015, explaining that buyers should aim to verify invoices in a ‘timely manner’ and suggests that this should be done within seven days of receipt of invoice.

Regulation 113 requires buyers within the public sector make provision in their contracts to pay supplier invoices within 30 days from when they are valid and undisputed. If a buyer fails to include such provisions, then these payment terms would be implied. 

The rules also mean it is expected these provisions be passed down the supply chain, meaning sub-contractors would also be covered.

The rules apply to all public sector contracts except certain contracts with the NHS and those with grant maintained schools or academies.

Suppliers are also encouraged to play their part by ensuring that the payment process runs as smoothly as possible by checking invoices carefully to ensure that they are accurate, sufficiently detailed and submitted in appropriate form.

But Jaime Jones, a solicitor at law firm Shoosmiths, told Recruiter agencies should check that public sector contracts contain the required payment provisions before bidding for work in the first place.

“Recruiters should check the terms of any contracts that they are bidding for and ensure that they contain the required payment provisions,” she said. 

“If they don’t they should flag this to the buyer because, although the payment terms would be implied, it would be better for both parties to have the certainty of express provisions.”

Meanwhile Samantha Hurley, head of external affairs & compliance at the Association of Professional Staffing Companies (APSCo), warns although the legislation is likely to benefit recruitment process outsourcing providers and managed service providers in the professional recruitment sector, many of smaller, second tier, recruitment suppliers may fail to feel the benefit. 

She said in a statement: “This is because the guidance does not stop first-tier suppliers from putting a ‘pay when paid’ clause in their contract. The guidance states that sub-contracted invoices must be paid within 30 days of when the invoice is deemed valid and undisputed. However, where there is a ‘pay when paid’ clause in place, the invoice arguably is not valid until the tier 1 supplier has been paid by the client. Inevitably, this means that second-tier suppliers could lose out. 

“Such ‘pay when paid’ clauses hinder smaller recruitment firms from accessing affordable finance, because their invoices are not readily payable, and the invoice finance sector will often charge more for this finance. Consequently, APSCo is calling for the government to take further action in this area, as detailed in our ‘Manifesto for 2015 & Beyond’.”

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