New measures to support the Prompt Payment Code (PPC) and drive a culture of better payment practice have been confirmed in a letter to PPC signatories from Margot James, Minister for Small Business and Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM).
The letter highlights the significant success of the Code to date, and in particular highlighting the challenges against Code signatories that it says have been ‘hugely successful in achieving fast settlement of invoices, creating dialogue between parties, improving contract terms, and providing constructive assistance welcomed by suppliers and signatories alike’.
The correspondence also confirms the future appointment of a Small Business Commissioner to provide help and advice to business, including on achieving prompt payment, and the Statutory Duty to Report for large businesses to report on payment practices that comes into force from 6 April, 2017. Further strengthening of the Code will follow the implementation of the Duty to Report measures.
The authors of the letter confirm that signatories should be paying within 30 days where possible and that this should increasingly be the norm. The Code Compliance Board will not be enforcing 30 day terms but states that paying invoices within 60 days will be a requirement unless there are exceptional circumstances that will be considered on a case by case basis. An example of ‘exceptional circumstances’ might be where a company is able to demonstrate that it applies different terms to the benefit of their smaller suppliers.
The Minister says that: “Prompt payment can make all the difference to small businesses, boosting their cashflow and allowing them to invest in growth for the future. Although we have seen some progress, there are still too many business owners across the country who have not been paid on time by their customers.
“We need a culture change to stamp this out and the Prompt Payment Code continues to play an important role in bringing this about, alongside a package of measures taken forward by government and industry. The businesses signed up to the Code commit to demonstrating the gold standard of payment practices and it’s great to see so many of Britain’s leading household names on the list.”
The Prompt Payment Code is administered by the CICM on behalf of the Department for Business, Energy and Industrial Strategy (BEIS). It currently has more than 1,800 signatories, with each signatory committing to best practice in the fair and equal treatment of suppliers, many of whom are smaller businesses.
Last year the Government announced a series of measures within the Small Business, Enterprise and Employment Act to further strengthen the Code.
The Chartered Institute of Credit Management (CICM) is Europe’s largest credit management organisation. The trusted leader in expertise for all credit matters, it represents the profession across trade, consumer and export credit, and all credit-related services. Formed over 75 years ago, it is the only such organisation accredited by Ofqual and it offers a comprehensive range of services and bespoke solutions for the credit professional as well as services and advice for the wider business community, including the acclaimed CICM/BEIS Managing Cashflow Guides.
CICM developed and introduced the Prompt Payment Code at the request of the Department for Business and hosts and administers it. CICM co-chairs the PPC Advisory Board, chairs the PPC Compliance Board, supports and advises government on matters relating to late payment and credit management.