New measures to support the Prompt Payment Code have been confirmed in a letter sent to signatories of the code from Small Business Minister, Margot James and Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM).
More than 1,800 firms are signed up to the Prompt Payment Code, with each one committing to the fair and equal treatment of suppliers. They agree to maximum payment terms of 60 days, with the letter confirming they should aim to pay within 30 days.
If payment terms stretch beyond 60 days, companies must demonstrate that exceptional circumstances apply. These will be considered on a case-by-case basis but could include commitments made to pay smaller suppliers faster than larger businesses.
Small Business Minister, Margot James, said:
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 letter also confirms that the Small Business Commissioner will be appointed to give advice and support on payment issues. The government will shortly consult on how the Commissioner will operate and handle complaints from small businesses.
The voluntary Prompt Payment Code is administered by the CICM on behalf of the Department for Business, Energy and Industrial Strategy. Measures to strengthen the code and increase transparency have now been put in place. The Small Business, Enterprise and Employment Act 2015 introduced the statutory duty for large businesses to report on payment practices. This is due to come into force in April 2017.
The letter is published in full on the CICM website.