Late payment kills businesses, it’s a fact.
Latest research shows that British SMEs are having to wait an average of 41 days longer than their original agreed payment terms before invoices are paid. (source: BACS)
Prime minister David Cameron said: “It’s not right that suppliers are not getting paid on time for the work they do and the services they provide. The government has already taken steps to help address this issue, but I am clear that more needs to be done to build a business culture across all sectors of the economy that sees the fair, prompt and reliable payment of suppliers become a core corporate responsibility.”
The government is to launch a consultation that will look at a range of issues including:
- how to encourage greater responsibility for payment policies at board level;
- what can be done to increase transparency around which companies are good payers and which ones are not;
- how the Prompt Payment Code can be strengthened;
- whether more can be done to enforce existing legislation, including the possible prohibition of “grossly unfair” payment terms;
- what can be done to encourage more companies to make use of their existing statutory right to interest for late payments;
- whether government can do more to help SMEs through new technologies and services like electronic invoicing and mobile payments.
Prompt Payment Code signatories undertake to:
Pay suppliers on time
- within the terms agreed at the outset of the contract
- without attempting to change payment terms retrospectively
- without changing practice on length of payment for smaller companies on unreasonable grounds
Give clear guidance to suppliers
- providing suppliers with clear and easily accessible guidance on payment procedures
- ensuring there is a system for dealing with complaints and disputes which is communicated to suppliers
- advising them promptly if there is any reason why an invoice will not be paid to the agreed terms
Encourage good practice
- by requesting that lead suppliers encourage adoption of the code throughout their own supply chains
https://www.promptpaymentcode.org.uk/
