Government takes action on persistent late payers

Date: 29 April 2019

Business filing folder dedicated to overdue payments issuesSeventeen companies - many of them household names - have been suspended or removed from the Prompt Payment Code for failing to pay their suppliers on time.

The announcement was made by the Chartered Institute of Credit Management (CICM), the body that administers the Prompt Payment Code (PPC ) on behalf of the government. Thousands of companies that have signed up to the code have pledged to uphold its best practice for payment standards. This includes a commitment to pay 95% of all supplier invoices within 60 days.

Based on the new Payment Practices Reporting data that large businesses must publicly report, the CICM has identified 17 businesses to be removed or suspended, with more removals and suspensions expected in a second phase of review.

Five companies have been removed from the code for non-compliance, including DHL, BHP Billiton and John Sisk & Son. A further 12 businesses have been suspended. They include: Balfour Beatty, British Sugar UK, Costain, Persimmon Homes, Rolls-Royce and Vodafone.

Meanwhile, the Go-Ahead Group has been re-instated to the code after filing data to show that it has been paying 95% of all invoices within 60 days for the last reported period.

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Businesses suspended from the PPC have been invited to produce an action plan setting out how they will achieve compliance within an agreed period. When they have achieved compliance, their status can be reinstated; if they fail, they will be removed.

Philip King, chief executive of CICM, said: "The board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly. As part of our work driving culture change to end late payments, we will continue to challenge signatories to the code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the code."

Small business commissioner Paul Uppal said: "It is essential the code has credibility and demonstrates a commitment to ensure small businesses are treated fairly … My team has already recovered more than £3.5 million in late payments and is ready and available to support small businesses experiencing poor payment practices."

From September 2019, any supplier who bids for a government contract above £5 million per annum will be required to answer questions about their payment practices and performance. The expected standard is to pay 95% of invoices in 60 days across all their business. Any supplier who is unable to demonstrate that they can meet this standard may be excluded from bidding.

Kelly Tolhurst, minister for small business said: "The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain."

Written by Rachel Miller.

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