Prompt Payment Code a success in changing payment culture

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.

Last year the government announced a series of measures within the Small Business, Enterprise and Employment Act to further strengthen the code.