Public sector payment terms: the 30-day rule

Public sector payment terms are set by law: under the Procurement Act 2023, a buyer must pay a valid invoice it doesn’t dispute within 30 days. The rule is implied into the public contract itself, and into sub-contracts beneath it. Formerly, regulation 113 of the Public Contracts Regulations 2015 did this job.

Thirty days is a legal maximum with exceptions, not a promise that you’ll be paid then. This guide sets out the rule and its limits, what makes an invoice valid, what reaches sub-contractors and where buyers’ payment records are published. It is part of our guide on how to win public sector contracts.

Public sector payment terms: the 30-day rule in section 68

Section 68 is headed “Implied payment terms in public contracts”. Its terms are implied into every public contract entered into by a contracting authority, except:

• a concession contract
• a utilities contract awarded by a private utility
• a contract awarded by a school (section 68(1))

A “public contract” is one whose estimated value reaches the relevant threshold and which isn’t exempted (section 3). The thresholds guidance says that estimated value includes VAT (para 1).

The main points:

• The clock. A sum due under the contract must be paid before the end of the 30 days beginning with the later of two days: the day the buyer receives the invoice, and the day the sum falls due under it (section 68(2)). For example, if an invoice reaches the buyer on 3 March and says payment is due on 20 March, the 30 days begin on 20 March, the later date. The day the buyer receives it and the due date on it both matter.
• Third-party payment. A buyer can rely on a payment made by a third party to satisfy this term only with the agreement of the payee, which is you (section 68(5)).
• The exception. The 30-day term doesn’t apply if the buyer considers the invoice invalid or disputes it (section 68(3)). It must tell you “without undue delay” (section 68(4)). In plain terms: 30 days applies to valid invoices the buyer doesn’t dispute.
• No contracting out. A term that purports to restrict or override these terms is “without effect” (section 68(6)).
• Paying sooner. The parties can agree to pay earlier (section 68(7)).
• A ceiling. Regulations can change the period, but it “may not exceed 30 days” (section 68(10)).

Formerly: regulation 113 of the Public Contracts Regulations 2015 was headed “Payment of undisputed invoices within 30 days by contracting authorities, contractors and subcontractors”. Those regulations are now marked as revoked on legislation.gov.uk.

What makes an invoice valid

Under section 68(8), an invoice is valid if it is an electronic invoice in the required electronic form. Otherwise it is valid if it sets out the minimum required information and meets any other requirement in the contract.

The minimum information is (section 68(9)):

• your name
• a description of the goods, services or works
• the sum requested
• a unique identification number

An invoice counts as received when it is delivered to an address or electronic system specified in the contract (section 68(11)). So send invoices by exactly the route the contract names. Section 67, headed “Electronic invoicing: implied term”, deals with the electronic form; see the Act’s contents.

Below-threshold contracts get the same 30 days

The same terms are implied into “every regulated below-threshold contract entered into by a contracting authority” (section 88(1)), with the same exception for an invoice the buyer considers invalid or disputes (section 88(3)).

They also reach contracts wholly or substantially for the purpose of performing such a contract (section 88(8)). See below-threshold contracts and our guide to council contracts for small businesses.

If you’re a sub-contractor

Section 73 implies the terms in section 68(2)–(5) into every public sub-contract. Two adjustments apply:

• In the sub-contract, references to the contracting authority mean the person to whom you supply goods, services or works (section 73(2)(a)).
• The electronic invoice route in section 68(8)(a) doesn’t apply (section 73(2)(b)).

A “public sub-contract” is a contract “substantially for the purpose of performing (or contributing to the performance of)” all or any part of a public contract (section 73(5)). Because a public contract is defined by its threshold, section 73 reaches sub-contracts under contracts at or above it. Under the threshold, section 88(8) does similar work, as above.

As with the main contract, a term that tries to restrict or override this is without effect (section 73(3)), and the exceptions mirror section 68: concession contracts, private utilities’ utilities contracts and contracts awarded by a school (section 73(6)).

Buyers can also spot check payment further down the chain. The Cabinet Office’s PPN 021: Payment Spot Checks in Public Sub-Contracts was published on 24 April 2025 and updated on 8 October 2025.

How to check whether a buyer pays on time

Two different notices carry payment information. Their codes and names come from the official Procurement Act e-learning, module 2.

Payments compliance notice (UK17). Under section 69, a buyer must publish one within 30 days after the end of each six-month reporting period, ending 31 March or 30 September. It covers compliance with the 30-day term in section 68(2).

The guidance says a notice includes:

• the average number of days taken to pay
• the percentage of payments made within set timeframes (the guidance lists bands of 1–30, 31–60 and 61 or more days)
• the percentage of invoices paid in line with section 68(2)
• a statement of approval from a director or similar officer (para 12)

Notices are published on the Central Digital Platform (para 8). The notice replaces and strengthens regulation 113(7) of the old regulations (para 7). It isn’t required of transferred Northern Ireland authorities or private utilities, or for school or concession contracts (section 69(6)).

Contract payment notice (UK8). This is a different notice. Under section 70, buyers publish information about any payment of more than £30,000 under a public contract, within 30 days of the end of the quarter in which it was paid. The section is in force from April 2026, for some contracts.

For the wider list of notices, see Find a Tender notice types.

On big contracts, your own payment record is tested

For contracts with an anticipated value above £5 million (including VAT) per year, PPN 018 looks at how a bidder pays its own suppliers (para 1). It replaced PPN 015 from 1 October 2025 (para 3).

PPN 018 applies to central government departments, their executive agencies and non-departmental public bodies, not to NHS trusts or devolved buyers. Other public buyers may choose to apply it (PPN 018 paras 3, 5 and 6).

A bidder that intends to use a supply chain has to show it pays invoices in an average of 45 days or fewer, and pays at least 95% of invoices within 60 days (90% if it provides an action plan). It must meet that in at least one of the last two six-month reporting periods (paras 2, 10 and 15). The check is made through conditions of participation (paras 5–6). A firm bidding at this size should have its figures ready. Smaller firms can move on.

Cash flow: what to plan for

Some points from the Act matter for your cash flow:

• The 30 days run from the later of receipt and the due date (section 68(2)).
• A disputed or invalid invoice takes the invoice outside the 30-day term (section 68(3)).
• An earlier payment date can be agreed (section 68(7)).

Beyond that, price and plan for being paid after you’ve paid your staff and suppliers. Work out how many weeks of wages, materials and sub-contractor costs you would carry before the first invoice is paid, and whether your bank facilities or reserves cover it. If a gap is too wide for you to bridge, that is a reason to pass on a tender, not a reason to bid and hope. Our guide to the economics questions in the bid or no-bid decision covers how to test that before you commit.

Scotland

Devolved Scottish authorities are generally outside the Act (section 2(5)(a)) and use the Public Contracts (Scotland) Regulations 2015. Scottish payment rules aren’t covered here. See tenders in Scotland.

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