Economy secretary Fiona Hyslop has urged public bodies to “act now” to support their suppliers so they are better able to cope with the current crisis.

Under the guidance, public sector organisations are encouraged to:

• modify terms of contracts to offer contractors relief
• agree interim payment proposals and modifications to current contracts
• accelerate payment practices to ensure suppliers are paid as quickly as possible.

Last week, the Cabinet Office issued a new Procurement Policy Note (PPN) which said contracting authorities “must act now to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over”.

The announcement came after Kingdom Housing Association revealed it had taken the decision to settle invoices immediately in recognition of the increasing importance of cash flow to its commercial partners during the current period of coronavirus uncertainty.

In a letter to public sector organisations, economy secretary Fiona Hyslop said: “The current outbreak of COVID-19 is already having a significant impact on businesses of all sizes. Many suppliers will struggle to meet their contractual obligations and this will put their financial viability, ability to retain staff and their supply chains at risk.

“Public bodies should act now to support their suppliers so they are better able to cope with the current crisis and to resume normal service delivery and fulfil their contractual obligations when the outbreak is over.

“This guidance provides a suggested template document that public bodies may wish to use when liaising with suppliers to agree interim payment proposals and modifications to current contracts.

“Public bodies should now aim to accelerate their payment practice to ensure payment is made as quickly as possible to their suppliers.

“The national endeavour to get us through this health crisis will require an unprecedented economic response shared collectively, deliberately and with purpose - by business, the public sector, unions, workers and the public.”

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