Pair sign up to code
Sep 2 2009 by jez Davison, Evening Gazette
TWO of Teesside’s local authorities have signed up to the Government’s Prompt Payment Code (PPC) in a bid to help small firms improve their cashflow.
The move comes as more than a third of respondents to a new Federation of Small Businesses (FSB) report said they had experienced delays in getting paid.
The FSB has urged public and private sector organisations to sign up to the PPC and has called for a proviso in all Government contracts requiring each business in the supply chain to pay on time.
Signatories to the PPC commit to settle bills within agreed timescales and provide suppliers with clear guidance on payment procedures.
Colin Stratton, FSB regional chairman for the North-east, said: “Larger organisations must stop using the recession as an excuse to use small firms as a source of credit.”
Redcar & Cleveland Borough Council and Hartlepool Borough Council have both signed up to the PPC and pledged to settle invoices within 10 days for local suppliers and other bills within 30 days.
The former said 98% of the estimated 140,000 invoices a year it paid out to 20,000 suppliers were settled on time.
Peter Scott, cabinet member for corporate resources, said the council was not planning to extend the payment times to suppliers when the recession was over.
He said: “SMEs need to get their money in on time. Perfectly good businesses go to the wall because of cashflow.”
Hartlepool Council said it was paying 97% of its 30-day invoices within the agreed period, with average monthly payments to suppliers totalling around £1m.
A spokesperson said occasional delays were due mainly to queries “over the quality of the invoice”.
Middlesbrough Council said it planned to sign up to the PPC “in the very near future”, having reduced its settlement times from 30 to 20 days since April. Currently 87% of its suppliers are paid within 20 days.
Darlington and Stockton councils said they had not signed up to the PPC but pledged to pay suppliers “across the board” within 28 days.
Last year, 137 North-east firms went out of business due to late payments, which cost regional businesses £19m in unnecessary interest. However few small firms challenge payment terms of big customers in particular as they are often afraid of losing vital work.
