SME campaigning group the Forum of Private Business (FPB) is urging more large companies to sign up to the Prompt Payment Code to help suppliers weather the economic storm.
The code, put together by the Institute of Credit Management, includes a number of pledges signatories must agree to.
They include paying suppliers on time within the terms agreed at the outset of the contract, without attempting to change payment terms retrospectively; giving clear guidance to suppliers and ensuring there is a system for dealing with complaints; and encouraging good practice by requesting lead suppliers encourage adoption of the code throughout their own supply chain. The Forum’s senior policy advisor Alex Jackman said: “Prompt payment is critical to the cash flow of every business, and especially to smaller businesses within the supply chain.
“The Prompt Payment Code is about encouraging and promoting best practice between organisations and their suppliers. Signatories to the Code commit to paying their suppliers within clearly defined terms, and commit also to ensuring there is a proper process for dealing with any issues that may arise.”
Labour MP Debbie Abrahams has launched a campaign to persuade all FTSE 100 companies to sign up to the Prompt Payment Code. A letter is being sent to the 70 or so plcs that have not done so, asking them to make it a priority.
FPB chief executive Phil Orford, who has signed the letter, said: “The Prompt Payment Code is something all large firms could and should subscribe to.
“The Code asks nothing more from responsible businesses than to pay suppliers as and when agreed, without changing payment times retrospectively.
“We know FTSE 100 businesses are bastions of the UK’s private sector, and by subscribing to the Code they will be leading the way as they rightly should for others to follow.
“This is their chance to lead by example on what’s an extremely important issue for small businesses.” The FPB has its own online hall of shame of businesses it believes are not playing fair by their suppliers through actions such as extending payment times.
Suppliers can nominate business they believe have treated them unfairly by contacting the Forum with documented evidence. The calls are treated in confidence.
The FPB has recently removed bathroom company Bristan from its hall of shame after the business signed up to the Prompt Payment Code. The Staffordshire-based company was added after it increased payment terms from 30 days to up to 90 last year.
Alex Jackman said: “But it is not just the timeliness of payment, though fast payment is always welcome, but rather the certainty of getting paid that is really important, and enables businesses to plan both for their short and longer term futures.
“Therefore we applaud Bristan for acting on our advice.”