Prompt Payments of Accounts Act 1997

This page contains the answers to Frequently Asked Questions about the Prompt Payments Act. : It should be noted that Sections 4 to 11 of the Act have been repealed by the Late Payments in Commercial Transactions Regulations 2002.These Regulations now apply to payments for commercial transactions in the public and private sectors.

Q1. What is the purpose of the Prompt Payment of Accounts Act ,1997 ?

A. The Act aims to ensure that all Public Bodies, and contractors on public sector contracts, pay amounts due to their suppliers promptly. An automatic entitlement to interest is provided for in respect of amounts due but not paid on time.

Q2. What is meant by ''prompt payment'' ?

A. The Act stipulates that payment must be made to suppliers for the supply of goods of services:

on or before the date on which payment is due under the terms of a written contract, or

where there is no written contract, or if the written contract does not specify a payment date, within 45 days of receipt of the invoice or delivery of the goods or services, whichever is the later.

Q3. What happens if payment is not made on time ?

A. If a payment is not made by the due date, the purchaser must pay an interest penaltyon the amount outstanding.Interest must be paid in respect of the period beginning on the date after the due date of payment and ending on the date on which payment is made.The interest payment must be accompanied by a notice stating the amount of the interest penalty included, the rate at which, and the period for which, the interest penalty is calculated.This interest payment cannot be waivedby the supplier

Q4. Who must comply with the Act?

A. All Public Bodies ( for example, Government Departments, Commercial and Non-Commercial Semi-State Bodies, Health Boards, Local Authorities , etc. ), and their subsidiaries must comply with the Act. The Act also applies to contractors on public sector contracts - where a contractor sub-contracts or obtains goods or services from another person in respect of a public sector contract, the contractor must comply with the payment provisions of the Act.