What we expect

For organisations with 51+ employees:

• Have you signed the government’s Prompt Payment Code and commit to do your best to work towards paying all suppliers within 30 days?

If the answer to the above questions is no, the question is followed up by:

• Do you commit going forwards to do so?

For organisations with less than 50 employees (streamlined version):

• Are you committed to paying your suppliers promptly, and within at least 30 days?

Evidence base – why is the Prompt payment to suppliers
component needed?

To apply to become a signatory of the Prompt Payment Code, see here:

https://www.smallbusinesscommissioner.gov.uk/ppc/

Why the Prompt Payment Code is important

“Paying on time is a cornerstone of good business practice: it is essential to fair and successful working relationships, ensures businesses can support employment and create new jobs in local communities and across the country, and provides businesses the sound financial base they need to plan confidently for the future.

Yet beyond this, companies have a moral responsibility to pay fairly and transparently, being mindful of the impact their payment practices can have on businesses, staff and customers through their supply chain.

The overwhelming majority of firms recognise this and already strive to act accordingly. Yet with small and medium size businesses’ late payment debt sitting at £14.2bn*, it is clear that payment practices continue to fall short of this vision in too many supply chains. This requires urgent action by business – not just because of the social and economic impact of late payment, but more importantly because paying promptly is the right thing to do.”

Where the Prompt Payment Code is problematic

We recognise that for some sectors the Prompt Payment Code is difficult to commit to such as where the industry norm is 60+ days payment terms or where short payment terms are not feasible because of the transit time from despatch to goods received.  Where terms are mutually agreed, not unilaterally imposed on suppliers, not signed under duress by them, and paid to agreed terms, we will allow an organisation to join the GBC without signing the PPC.  Instead, we will ask members to sign a separate commitment confirming their good intent and adherence to these conditions.

There are also some issues with the strengthened Prompt Payment Code for organisations knowing which companies fall into the ‘small supplier’ category because of not knowing how many employees a supplier may have.  Our main consideration for this component is that small suppliers are not bullied into accepting unfair payment terms by large customers and to this end we have designed a statement that seeks to ensure that the rights of small suppliers are protected.