New Prompt Payment Code signatories welcomed by small businesses

The Federation of Small Businesses (FSB) has welcomed the Government’s announcement that 32 of it’s biggest suppliers have signed up to the Prompt Payment Code. The move represents a positive step in tackling the poor payment culture that is rife in the UK.

Research from FSB highlights that the UK’s poor payments culture costs the UK economy £2.5bn each year and kills 50,000 small firms. 30 per cent of small businesses report that, on average, 30 per cent of payments are typically late. In 2016 the average value of each late payment stood at £6,142.

FSB National Chairman Mike Cherry said: “It is good to see the Government fulfilling one of its manifesto pledges by getting big Government contractors to sign up to the Prompt Payment Code. For far too long small businesses have been subjected to supply chain bullying and victims of the poor payment culture rife in the UK.

“What the small business community needs now is further action to give the voluntary Prompt Payment Code even greater teeth. The Government should make it mandatory for all FTSE 350 businesses to sign up to the Prompt Payment Code and introduce a tough penalties regime for repeat offenders of poor payment practices.

“This should come in the form of a ‘three strikes and you’re out’ policy where signatories are struck off if they do not pay within the time frame. Additionally, the soon-to-be-appointed Small Business Commissioner needs to be given greater responsibility to review and refresh the Prompt Payment Code, and have the power and resources to make a real difference to the £28bn currently held up in late payment.

The Government needs to act now and be the agent of change in improving the UK’s payment culture and address some of the unacceptable practices carried out by larger companies.”

Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM), said: “It is important to see that all of the government’s strategic suppliers are now leading by example by signing up to the Prompt Payment Code. The PPC allows suppliers to raise a challenge if they feel they are not being treated fairly by a signatory, and such challenges are proving successful not only in delivering payment but also in further improving practices and processes. It’s vital that businesses feel confident and have certainty that they will be paid on time, as well as having a route to challenge if they need to.”