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Government begins support for SME service providers

11 April 2018

Small- and medium-sized companies providing services to government will receive a number of supportive measures, it was announced yesterday.

It coincides with additional proposals and movements from industry bodies focusing on the need to improve supply chain payment following the demise of Carillion earlier this year.

Details have emerged of how the company would make members of its supply chain wait up to 90 days before paying invoices, causing significant cash flow issues.

Speaking on this topic, Specialist Engineering Contractors' (SEC) Group chief executive officer (CEO) Professor Rudi Klein said his organisation has urged the government to introduce yellow and red card warnings "for a long time.

"The yellow card is a warning to improve payment performance and the red card excludes a continuing poor performer from bidding for government contracts for a period of two to three years," he said.

Professor Klein said that this system would have seen Carillion excluded from government contracts, had it been adopted previously.

The SEC Group also believes the government should make project bank accounts mandatory for public sector projects, while also supporting the Aldous Bill on addressing issues around cash retentions.

Peter Aldous MP will deliver a petition to Downing Street on 23 April along with Federation of Master Buildings chief executive Mike Berry, Institute of Directors director general Stephen Martin, Electrical Contractors' Association (ECA) CEO Steve Bratt and Building Engineering Services Association (BESA) CEO David Frise.

The presentation will be coordinated by the BESA and ECA and will urge the government to make it mandatory for cash retentions to be placed in trust accounts, so the funds are protected when major companies go out of business.

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