New procurement guidance to ease cash flow pressures on suppliers

In response to the Covid-19 crisis, the Cabinet Office has actioned an immediate change to the use of procurement cards, to improve organisations’ efficiency and ensure payments are made alongside robust controls.

The additional pressure experienced by the supply chain during this period can have a serious effect on maintaining cashflow and the delivery of goods or services.

Procurement cards enable contracting authorities to pay suppliers more quickly, protecting as many jobs as possible during the Covid-19 crisis.  

In a newly published Procurement Policy Note (PPN) the Cabinet Office is urging organisations to engage with their procurement card provider to change the way they are used in response to the crisis.

These changes include increasing the single transaction limit to £20,000 and raising the monthly limit to £100,000 to meet business needs.

Card holders are expected to work with their card provider to find an appropriate limit for them in line with this PPN, as a £100,000 monthly limit may not be required in some cases.

The public sector is already required to pay suppliers within 30 days of invoice, however this PPN aims to accelerate this payment and ensure suppliers are paid more swiftly.

According to the new guidance, in scope organisations should also ensure an appropriate number of staff have the authority to use these cards by April 30 2020, making for more agile, responsive procurement whilst still retaining controls.

Procurement cards are considered to be the most efficient way for organisations to pay for goods and services. The NAO has estimated that using cards typically saves around 35% in transaction costs or £5 per transaction compared with traditional methods.

Read the full PPN guidance here.


To learn more about the changes to procurement policy and the public sector's current purchasing requirements submit your details and one of our specialists will be in touch.


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