NORTH-EAST firms have welcomed beefed-up laws aimed at tackling the scourge of late payments to suppliers.

Francis Maude, Minister for the Cabinet Office, has today outlined new measures that he said will open up billions of pounds in Government contracts to small and medium-sized businesses (SMEs) like never before.

Paying businesses on time is critical to the cash flow with 54 per cent of SMEs in the region seeing late payment from customers as a hindrance to growing their business, and creating jobs.

Under these new rules, the public sector is now required to pay undisputed invoices within 30 days, and this requirement will flow down the supply chain - to suppliers and sub-contractors.

Furthermore, public bodies will have to publish an annual late payment report to sharpen accountability. The bidding process will be simplified across the wider public sector with complex forms, such as pre-qualification questionnaires, abolished for low value contracts and the procurement process for public sector contracts will be accelerated.

Central government spent an £11.4bn with SMEs in 2013-14, as new figures showed that a record 26.1 per cent of government spend went to SMEs.

Ted Salmon, FSB North East Regional Chairman, said: “Our members will welcome the proposals announced today which should help more win more business with the public sector. We know that increasing the spend with small businesses means that 60p in every pound stays in the local community which in turn creates jobs and boosts investment. It is therefore crucial that the public sector in the North-East leads the way in implementing these reforms.

“For too many of our members it is not winning the business that is hard it is getting paid on time. We have seen the cost of late payment and the time taken to pay consistently increase. It is vital that the public sector and some of the larger suppliers pay small businesses promptly to help ease cashflow problems which holds back investment and job creation.

“We will continue to push for the public sector across the region to help more small businesses win contracts. These reforms are an important step in the right direction.”

The Government has also revamped its Contracts Finder website, at www.gov.uk/contracts-finder, offering an improved search including by location.

The site covers current and future public sector contracts above £10,000 in central government and £25,000 in the wider public sector.