Get paid from Public Sector Customers

Public administrations are often regarded as reliable customers. Yet suppliers sometimes find it surprisingly difficult to get their invoices paid. The problem is not necessarily the customer's solvency: it is frequently the complexity of its purchasing and payment processes.

Collecting from a public-sector customer therefore requires a different approach from collecting from a private company facing cash-flow difficulties. The credit manager must understand the organisation, identify where an invoice is blocked and find the person able to remove that obstacle.

Why do public-sector organisations pay late?

Public-sector purchasing and accounts payable departments process large volumes of invoices. To reduce costs and standardise procedures, many have introduced integrated purchasing, accounting and electronic invoicing systems. These tools can be very efficient when all information is correct. They can also make exceptions extremely difficult to resolve.

In France, the development of the State's Chorus financial information system illustrates this transformation. The implementation of such large systems has not always been painless for suppliers. Today, Chorus Pro is the electronic invoicing platform used by suppliers to French public buyers.

Forget the image of an accountant simply receiving an invoice and authorising payment. A modern public-sector invoice travels through several systems and departments. If one required action is missing, the whole process can stop.

These problems are not necessarily caused by a deliberate decision to delay payment. Often, nobody has taken the action needed to move the invoice to the next stage. Large-scale automation can be excellent at processing compliant invoices but much less effective at handling exceptions.

For the supplier, the result is the same as any other overdue receivable: the cash has not arrived.

Get it right before issuing the invoice

Prevention is especially important when selling to public-sector customers. Before accepting an order, understand exactly how the organisation purchases, receives and pays for goods and services.

Public buyers often publish supplier instructions. Read and apply them carefully. They may specify invoice routing, purchase order references, electronic portals and contacts for payment problems.

Never assume that an informal order received by email is enough. If the public buyer requires an official purchase order, obtain it before proceeding. The commercial contact who requested the service may not be the person who can approve it for payment.

How to follow up effectively with a public-sector customer

A standard reminder sent to the general address of a ministry or public institution is unlikely to solve a blocked invoice. The collector needs to become an investigator.

Supplier support teams can help identify an invoice's status, but getting a clear answer may require persistence. In France, Chorus Pro offers invoice tracking and status information. The supplier may also need to contact the person identified on the purchase order or the relevant operational department.

An effective credit manager may need to know the public customer's internal payment process almost as well as its own employees. That knowledge is not a luxury: it is what makes results possible.

Cash collection is also the art of building relationships

The ability to establish constructive relationships with key people inside the organisation is decisive. They know the processes, understand who is responsible for each step and can often help remove obstacles that seem impossible to resolve from outside.

Faced with a bureaucratic and sometimes opaque organisation, irritation and aggressive language are usually counterproductive. They can alienate precisely the people whose help you need.

The right approach is to respect the customer's formal procedures while identifying and removing the small obstacles that prevent the invoice from moving through the system.

Of course, administrative complexity is not an excuse for late payment. But treating every delay as deliberate bad faith rarely produces the fastest result.

Payment deadlines and late-payment rights: the French example

Public-sector payment deadlines are regulated in France. The applicable period depends on the type of public buyer and the contract. The most common maximum periods are:

The starting point is governed by public procurement rules, including the receipt of the payment request and, where applicable, the date on which the goods or services have been duly accepted. The invoice issue date alone does not always determine the deadline.

These obligations are provided for by the French Public Procurement Code. In principle, the public buyer must pay the statutory amounts even without a request from the supplier. In practice, suppliers should still monitor them and follow up when necessary.

Official references: French Ministry of Economy supplier guidance and guidance on payment problems and Chorus Pro.

What about public-sector customers outside France?

The operational challenges described here are not uniquely French. Government agencies, hospitals, municipalities, universities and public enterprises around the world rely on structured procurement and approval processes. A missing reference or unapproved delivery can delay payment even when funds are available.

However, payment deadlines, statutory interest, electronic invoicing obligations and remedies vary by country. The French deadlines and €40 compensation described above should not be applied automatically to contracts with foreign public buyers.

For international portfolios, record the applicable jurisdiction, public-buyer category, invoicing platform, mandatory references, acceptance procedure, payment deadline and escalation contacts for each customer.

Conclusion: administrative risk is a genuine credit risk

Administrative payment risk belongs alongside insolvency risk and political risk in a credit manager's assessment. Its cause may be different, but its consequence is identical: an overdue receivable and cash missing from the business.

It can be particularly dangerous because suppliers often underestimate it. A public customer may appear reassuring simply because it is backed by the State or another public authority.

Successful public-sector cash collection begins before invoicing. Understand the buyer's procedures, provide accurate information, build relationships with the right people and intervene as soon as a processing issue appears. When all the necessary steps are completed, payment can proceed. When one is missing, another generic reminder is rarely the answer.

Related reading: Late payment penalties and Choosing credit management software.