Check the deal with your prime

The Government Commercial Agency published new guidance on 23 October for small and medium-sized businesses seeking public-sector work through a prime supplier. The prime holds the main contract with the buyer; the smaller firm performs part of the work as a subcontractor.

The central advice is to establish your commercial bottom line before negotiating and put the promised share of work in writing. A verbal prospect of future work is not a guaranteed contract value.

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Seven checks before signing

1. Workshare: the exact value, percentage or defined scope guaranteed to your business.
2. Payment: the deadline, when an invoice is treated as received, acceptance steps and a dispute contact.
3. Liability: caps, penalties and insurance proportionate to your part of the project.
4. Intellectual property: ownership and licences for code, designs, documents and know-how created before and during the contract.
5. Exclusivity: whether the deal restricts sales to other customers.
6. Customer access and publicity: whether you can speak to the end buyer and use the work in a case study.
7. Exit: termination rights, payment for completed work and return of data.

The agency also warns SMEs against becoming dependent on one prime. Keep your own market knowledge, sales pipeline and ability to win direct work.

When is payment late?

If two businesses have not agreed a payment date, payment is normally late 30 days after the later of the customer receiving the invoice or the goods or service being supplied. Business contracts normally set a date within 60 days; a longer period must be fair to both businesses.

Statutory interest is 8 percentage points above Bank Rate. Bank Rate was 3.75% on 23 October 2026, making the current total 11.75% a year. If the contract provides a different late-payment interest rate, statutory interest is generally unavailable.

Example: a £10,000 debt accrues about £3.22 a day, or approximately £96.58 over 30 days. Check Bank Rate again before calculating because it can change.

Add £40, £70 or £100

A supplier may also add a fixed recovery sum once for each late payment:

• debt up to £999.99 — £40;
• £1,000 to £9,999.99 — £70;
• £10,000 or more — £100.

Public contracts use a 30-day payment standard. In England, Wales and Northern Ireland, qualifying contracts under the Procurement Act pass the term down the supply chain. Scotland has separate procurement policy that also seeks payment of contractors and subcontractors within 30 days of a valid invoice.

What to do today

1. Compare your draft with the seven checks above and identify promises missing from the written terms.
2. Ask for guaranteed workshare, a payment deadline and a liability cap before work starts.
3. Keep the contract, order, invoice, proof of delivery and acceptance.
4. If payment is late, set out the principal, interest and recovery sum in writing; issue a separate interest invoice if you choose to claim it.
5. For public work, ask for the end buyer’s name and the escalation contact for delayed supply-chain payments.

Sources: the Government Commercial Agency’s new SME guidance, official late-commercial-payment rules, prompt-payment policy and the official Bank Rate. Checked 23 October 2026.