Teeth grow slowly for Prompt Payment Code

Minister for small business, Kelly Tolhurst, has told MPs that signatories to the Prompt Payment Code will be investigated if they do not adhere to its terms. Prompt Payment Code signatories are meant to pay all suppliers in 60 days and work towards paying them in 30 days.

When addressing the Select Committee, Ms Tolhurst said: “We will now investigate all complaints against signatories of the Code and there will be regular reviews of signatories to the Code.”

Any sign of toughening the stance is a welcome development in what has largely been seen as a well-intentioned, yet toothless, initiative introduced by the Government back in 2008. Proving, however, that teeth grow slowly, it seems that firms found in breach will not be fined. Instead, they will be encouraged to follow “best practice” – hardly a threat likely to make serial late payers shake in their boots.

Until we get fines, naming and shaming, and the withdrawal of public sector contracts from businesses that continue to use their muscle to protect their cash flow at the expense of their small business suppliers, we’re going to see little or no improvement in the late payment culture which pervades British business and acts as a break on productivity and growth.

One of the most widely affected sectors for late and non-payment is Construction and recently collapsed Carillion was known to be a very late payer. Kier and Mears where also thrown into the spotlight by the Select Committee.

As ever, the primary responsibility for managing late payment will continue to rest firmly with the small supplier. To help, CaFE software has been designed to provide business owners with an accurate and automated view of their likely future cash position. Used by businesses in a wide variety of sectors, it allows them to be proactive in countering any problems. CaFE users might not be able to prevent late payment, but they can at least plan for it.

October 11, 2018 by Makoto Fukuhara Categories: Accountants and bookkeepers