Advance payment
UK public buyers rarely pay in advance. What the Procurement Act 2023 gives you instead is a statutory 30-day payment term. Bonds, exceptions and cash-flow advice.
Updated on September 5, 2026
An advance payment is money paid by the buyer to the supplier before any work is done, to fund start-up costs: materials, mobilisation of teams, orders to suppliers. The United Kingdom has no equivalent of the French statutory advance. Public bodies pay in arrears for goods and services actually received, and an advance is the exception rather than the rule.
How it works
Central government departments and their arm's-length bodies operate under Treasury rules requiring payment in arrears, with advance or prepayment allowed only where it is demonstrably better value or unavoidable, and normally against security: an advance payment bond, a parent company guarantee or an escrow arrangement. Local authorities, NHS bodies and universities follow the same logic through their own financial regulations. Where an advance is offered, the terms sit in the contract conditions and the amount is recovered by deduction from later payments.
What the Procurement Act 2023 does give a supplier is certainty of payment timing. Section 68 implies a 30-day payment term into every public contract, running from the day the invoice is received or, if later, the day payment falls due under it (verified 2026-09-05). Concession contracts, private utilities contracts and certain school contracts sit outside it. The Act extends the same discipline down the supply chain, so a subcontractor on a public contract benefits from equivalent terms, and larger authorities must publish notices reporting their payment performance.
In construction, mobilisation cash flow is handled differently again: through monthly interim payments under the Construction Act payment regime, project bank accounts on major projects, and sometimes a reduced or waived retention. Ireland follows the same pattern, with prompt-payment rules and no general entitlement to an advance.
What it means for a bidder
Do not build an advance into your cash-flow plan unless the tender documents actually offer one. Instead, check three things before you price: the payment milestones, whether interim payments are monthly or on completion, and whether retention or a bond will tie up capital.
If an advance is on offer, read what it costs. A bond carries a fee and consumes your bank facility, which may outweigh the benefit on a small contract.
Where the contract runs for several years, the real protection is the price adjustment clause rather than any up-front payment. Check whether it exists and which index it uses before you commit to rates.
Example
A roofing contractor wins a government estate refurbishment worth £360,000 including VAT over eight months. There is no advance. The contract provides for monthly interim valuations, payment within 30 days of invoice and 3 per cent retention released at practical completion. The contractor negotiates 60-day terms with its timber supplier so the two cycles line up, rather than relying on an advance that was never available.
Frequently asked questions
Can I ask for an advance payment?
You can raise it as a clarification question, but a buyer cannot introduce one after tenders are issued without treating all bidders equally. Assume there is none unless the documents say otherwise.
When do I actually get paid?
Within 30 days of the buyer receiving a valid, undisputed invoice. If it is late, statutory interest is due.
Is an advance the same as an interim payment?
No. An interim payment pays for work already done. An advance is pre-funding, recovered from later payments.