Are You Making Use of The Prompt Payment Code of Practice?
Business Secretary Lord Mandelson recently launched a new Code of Practice to help increase the speed of payments to smaller companies.
The code was launched at a prompt payment summit, where Lord Mandelson met representatives from some of the UK's top companies including John Lewis Partnership, British Gas and Asda.
The code, developed with the Institute of Credit Management and supported by major business organisations, aims to establish a clear and consistent policy in the payment of business to business bills.
The Institute of Credit Management will host the code on its website and will include a facility for suppliers to raise concerns about late payers.
Business Secretary Lord Mandelson said:
"I am very pleased we have been able to reach agreement on the code. The code focuses on ensuring firms pay their suppliers on time and do not attempt to change their payment terms retrospectively. This will be essential to help smaller firms maintain cash flow in the months ahead.
"I want the maximum number of businesses to sign up to it"
The Code of Conduct, which leading suppliers are urged to sign, focuses on three main areas:
- A commitment to pay suppliers on time;
- To give clear guidance to suppliers; and
- To encourage good practice.
Philip King, Director General of the Institute of Credit Management (ICM) said:
"Cash flow keeps business in business, and the Prompt Payment Code we've launched with BERR will help to bring businesses certainty in this increasingly difficult climate.
"We are delighted to be hosting this initiative on our website, which builds on our 'Treating suppliers fairly' guide, part of the 'Managing Cashflow' series we recently produced with BERR."
The summit followed a commitment by central Government to pay its suppliers within ten days.
The summit also focused on good practice examples and discussed in detail what measures should be adopted to ensure suppliers are paid on time.
Notes to Editors:
The Prompt Payment Code
* 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.