Why this matters now
By the 8th of June 2026, the first statutory reporting deadline for payments compliance notices under the Procurement Act 2023 has passed. The first six-month reporting period ran from the 1st of October 2025 to the 31st of March 2026, and a notice was required within 30 days of the end of that period where the statutory trigger was met.
The second reporting period is already underway, running from the 1st of April 2026 to the 30th of September 2026.
This makes prompt payment an immediate governance issue for councils. It is no longer sufficient to rely on an organisational commitment to pay suppliers quickly or to review accounts payable data only when complaints are received. Authorities managing public contracts under the new regime need payment information that is capable of being calculated, assured, approved and published.
The issue is particularly important for local government because delayed payment can affect the very suppliers councils are often seeking to support: smaller businesses, charities, voluntary, community and social enterprises, social care providers, specialist works contractors and local service organisations with limited cash reserves.
The Cabinet Office guidance on payments compliance notices, updated on the 20th of April 2026, confirms the purpose of the notice: transparency over compliance with the Act and how promptly public bodies pay suppliers. For councils, the practical consequence is that internal processing delay can now become publicly visible procurement performance.
What a payments compliance notice is designed to show
A payments compliance notice sets out the extent to which a contracting authority has paid invoices in accordance with the payment term in section 68(2) of the Procurement Act 2023 over a six-month reporting period.
Section 69 of the Act requires a contracting authority to publish a notice on the central digital platform within 30 days of the end of a reporting period if it made a payment under a public contract or a sum became payable under a public contract during that period, subject to the applicable exclusions.
The notice must include contracting authority details and the reporting period dates.
It must show the average number of days taken to make payments.
It must show the percentage of payments made within 30 days, between 31 and 60 days, and on or after day 61.
It must show the percentage of invoices paid in accordance with the statutory payment term.
It must include a statement of approval by the finance director or equivalent officer.
These measures are not interchangeable. A council might pay many invoices eventually and still perform poorly against statutory compliance if valid, undisputed invoices are not paid within the required timeframe. An authority might also show acceptable overall averages while a group of critical small suppliers experiences repeated delay.
The publication requirement therefore exposes not just payment speed, but the quality of the processes that surround invoice receipt, validation, dispute and payment approval.
Why the first reporting cycle should be treated as a diagnostic exercise
The first notice should not be filed away as a completed compliance return. It gives councils the first opportunity to identify whether their procurement, finance and contract management data work together under the new transparency regime.
A poor result may indicate that invoices are genuinely being paid late. It may also reveal systemic issues that sit behind the headline figure.
The contract may not state a clear invoice submission address or electronic route.
Service teams may take too long to confirm delivery or approve invoices.
Purchase orders may be raised late or incorrectly.
Invoices may be disputed without the supplier being informed without undue delay.
Supplier records may not be linked consistently to the relevant public contract.
Finance systems may not distinguish Procurement Act public contracts from legacy contracts, grants, non-contractual payments or below-threshold activity.
Batch files, credit notes, direct debits, instalments or partial payments may be interpreted inconsistently.
Each of these issues affects the reliability of published information. More importantly, each can create avoidable financial pressure for a supplier.
Councils should therefore use the first notice as a control review. The question is not merely whether the authority published on time. The question is whether the authority can repeat the exercise accurately, with less manual intervention and improved outcomes, when the second reporting period closes on the 30th of September 2026.
Scope matters: councils will manage mixed contract portfolios
One of the practical difficulties for local authorities is that contract portfolios will remain mixed for several years.
Authorities will continue to manage contracts awarded under the previous procurement legislation alongside contracts entered into following procurements commenced under the Procurement Act 2023. They may also manage below-threshold contracts, frameworks and call-offs, concession arrangements, grants, partnership payments and other financial activity that does not fall within the same statutory reporting duty.
The guidance confirms that payments compliance notices are required for payments under public contracts within scope, with specified exceptions including contracts entered into by schools and concession contracts. Grants are not public contracts and are not captured by the duty.
The guidance further confirms that the Act does not require payments compliance notices relating to below-threshold contracts, although authorities are permitted and encouraged to publish voluntarily because this can provide a more complete picture and may be simpler than excluding relevant payments.
For councils, this means scope is both a legal question and a data-management question. A financial ledger may show the supplier and amount paid but not reliably identify the legal regime, contract status, value classification or reporting treatment. If the authority cannot join its contract register to its payment data, the preparation of every notice may become a manual reconciliation exercise with an increased risk of error.
A robust contract register should therefore record sufficient information to support payment reporting, including contract identifier, supplier identifier, applicable procurement regime, public contract status, contract value, responsible contract manager, payment route and reporting status.
The calculation details matter more than they first appear
Payment reporting is not simply a count of invoices marked paid.
The guidance explains that payment timing for the report begins by reference to the invoice day, with specific rules applying for the calculation concerned. For general payment-time metrics, day one is the day after the invoice is received. For compliance with the section 68(2) payment term, day one is the day the invoice is received.
The guidance also makes clear that all percentages are based on invoice numbers rather than total invoice value. A delayed invoice of modest value therefore counts within the percentage calculation in the same way as a delayed high-value invoice.
Invalid or disputed invoices require careful handling. Where an invoice is invalid or disputed but is nevertheless paid in the reporting period, it is included in general payment calculations. However, an invalid or disputed invoice is not treated as an invoice paid in accordance with section 68(2), even if payment is ultimately made within 30 days.
This creates an important operational implication. Authorities that do not deal promptly and clearly with disputed or invalid invoices can affect both supplier relationships and their own published compliance data.
The contract should identify where invoices are to be submitted, what information is required, who is responsible for approval and what procedure applies where an invoice is disputed. On receipt of an invoice that is considered invalid or disputed, the authority is required to notify the supplier without undue delay.
Council teams should also recognise that payment is treated as made when received by the supplier, subject to the relevant exception for delays outside the authority's responsibility. Where BACS is used, the guidance advises authorities to arrange for payments to leave their bank accounts sufficiently in advance of the payment deadline to allow for processing time, weekends and bank holidays.
These details make payment compliance a managed process, not simply a finance report.
Prompt payment and local market resilience
Payment performance has a direct relationship with the sustainability of council supply chains.
A large national contractor may be capable of absorbing a short payment delay, even though it should not be expected to do so. A small domiciliary care provider, community transport organisation, local construction subcontractor or VCSE may be exposed quickly to cash flow pressure where invoices are delayed.
This is particularly significant where councils are seeking to widen access for SMEs and VCSEs. Removing barriers during procurement is only part of the task. A supplier that wins a contract but is then required to finance late council payments has not encountered an accessible commercial environment.
There is also a delivery risk. Persistent late payment can reduce a supplier's ability to retain staff, purchase materials, pay its own subcontractors or invest in service quality. In essential services, the impact may be felt by residents before it is visible in corporate financial information.
Payment data should therefore be considered alongside contract performance, complaints, workforce risks, financial monitoring and business continuity planning. Where an authority identifies delayed payment to a critical or fragile provider, correction should be treated as both a compliance action and a service continuity measure.
Payment failure is often a contract management problem
A council may be tempted to allocate ownership of payments compliance entirely to its finance team. Finance ownership is essential, particularly because the notice requires senior finance approval. It is not enough.
Payment delay may arise because the service manager has not confirmed whether deliverables were received.
It may arise because the specification and payment mechanism do not provide sufficient clarity about what evidence is required.
It may arise because a performance dispute is being managed informally, leaving an invoice in limbo.
It may arise because a variation has been requested or delivered without the contract price being formally amended.
It may arise because supplier mobilisation did not include testing of invoicing and approval arrangements.
These are commercial and contract management issues.
For new contracts, councils should include payment processes within mobilisation, not wait for the first invoice to expose weaknesses. Contract managers and suppliers should understand submission routes, invoice requirements, purchase order references, approval timescales, dispute procedures, performance deduction processes, escalation contacts and reporting responsibilities.
For existing contracts, a pattern of late or disputed invoices should trigger a contract-level review. The authority should establish whether the cause is supplier error, internal delay, contract ambiguity, performance dispute, system design or a combination of factors.
Governance implications for senior officers and members
A payments compliance notice includes senior approval and is published centrally. Poor results are therefore capable of attracting scrutiny from suppliers, elected members, audit functions, scrutiny committees and the market.
An authority should be prepared to answer practical questions.
What caused delayed payment?
Which supplier groups or contract categories were most affected?
Were critical suppliers exposed to financial or service continuity risk?
Was the published data complete and accurately scoped?
What actions have been taken before the next reporting period ends?
Is the authority paying suppliers promptly throughout the supply chain where its contracts require this?
A weak response would treat a poor published percentage as a reputational communications issue. A strong response would demonstrate that the authority understands root causes, has corrected its processes and is tracking whether performance improves.
Procurement governance should also ensure that payment data is not divorced from commissioning risk. In markets where continuity is fragile, such as care, supported accommodation, transport or specialist community provision, late payment can accelerate market exit or destabilisation.
What councils should do now
Confirm the quality of the first published notice.
Authorities should retain evidence showing scope, data extraction, calculation methodology, exclusions, voluntary inclusions, approval and publication. Where an error or material omission is identified, the authority should consider promptly how it should be corrected transparently.
Create a contract-to-payment reporting map.
Procurement, finance and contract management colleagues should agree how public contracts, below-threshold contracts, legacy arrangements and non-contract payments are identified within payment data. Reliance on manual knowledge held by individual officers will not provide a sustainable reporting process.
Undertake contract-level root cause analysis.
A published percentage cannot show why an invoice was late. Councils should identify repeated delays by service, supplier, approver, contract type and invoice issue, then address the operational problem.
Introduce in-period monitoring.
The second reporting period is already underway. Monthly monitoring allows an authority to act while an invoice can still be paid promptly, rather than discovering poor performance after the period has closed.
Review contract clauses and mobilisation packs.
Invoice instructions, approval routes, valid invoice requirements, payment terms, dispute procedures, performance deduction mechanisms and supplier escalation points should be explicit and usable in practice.
Link late payment to supplier risk.
Where a delayed payment concerns a critical supplier, an SME or VCSE, or a provider showing other signs of distress, the issue should be considered within the council's supplier risk and service continuity arrangements.
Provide operational training.
Commissioners, contract managers and finance officers all affect payment performance. Teams should understand the effect of delayed approval, unclear disputes, incorrect data classification and the statutory reporting consequences of routine operational decisions.
Practical guidance and implementation tools for contract management and transparency processes can be supported through the Prestige Commercial Consulting support hub. Authorities seeking structured capability development on Procurement Act 2023 contract management and reporting can access the PCC Learning Platform.
The supplier perspective
Suppliers should understand that the new reporting duty does not remove the need to submit clear and valid invoices in accordance with the contract. Suppliers should ensure that invoice routes, evidence requirements and payment contacts are understood before delivery begins.
Where an invoice is disputed or a payment is delayed, early written escalation is important. Smaller suppliers should not assume repeated delay is an unavoidable feature of public sector contracting.
For suppliers considering future council opportunities, published payment data may increasingly become part of commercial due diligence. Authorities that demonstrate reliable payment processes may be more attractive customers to a wider and more resilient supplier market.
Closing takeaway
The first payments compliance notice deadline has changed the practical meaning of prompt payment for councils. Payment performance is now part of visible procurement governance under the Procurement Act 2023.
Authorities should use the period after the first publication to improve systems, link contracts to payment data, resolve repeated operational delay and protect supplier confidence before the next reporting period closes.
A council that supports local businesses and essential providers must do more than offer opportunities to bid. It must administer awarded contracts fairly, accurately and promptly.
For support with transparency readiness, contract management processes or procurement governance improvement, contact Prestige Commercial Consulting Limited.