BREAKING NEWS: ICM gives evidence
Press Release – 14 October 2014
A leading business organisation has welcomed the commitment by Government to further strengthen the Prompt Payment Code (PPC), one of the principal weapons in the fight against unfair payment practices.
But in giving evidence today to the House of Commons Public Bill Committee considering the Government’s Small Business, Enterprise and Employment Bill, Philip King, Chief Executive of The Institute of Credit Management (ICM), said that the introduction of a mechanism to allow grossly unfair terms to be challenged by business representative organisations should now be accelerated: “It is something that we have proposed for some time,” Mr King told the committee.
“We accused the Government in the spring of ducking this issue and it is important that we now seize the opportunity of making it happen.”
Mr King said that there was no silver bullet to the issue of late payment: “A combination of good credit management, greater transparency between customer and supplier, and sharing best practice, complemented by effective legislation and non-legislative measures such as the Prompt Payment Code, can dramatically reduce both the impact and the frequency of late payment,” he added.
“There are many tangible examples where such best practice has achieved notable results in reducing payment times and getting the basics of credit management right is a good starting point, including the agreement of terms and conditions that are acceptable to both parties.”
Late Payment, Mr King stressed, is not an issue that is exclusive to small businesses: “It is not always, or only, big businesses that exploit the small; some small businesses behave badly too and that shouldn’t be overlooked,” he said. “We need a change in culture from top to bottom.”
He welcomed the provision in the Bill requiring big businesses to report on their payment practice but urged that the focus should be more on policy and practice than on an average payment days number. “An ‘average’ is unhelpful when a company has numerous suppliers ranging from window cleaners to major corporates,” he continued. “A clear statement of a company’s policy, culture and ethical stance towards payment of suppliers will be of greater value.”
The measures requiring banks to provide data to designated credit reference agencies, and for the disclosure of VAT registration information, were also welcomed: “Anything that helps one business assess the creditworthiness of another in order to facilitate trade is to be welcomed insofar as it supports growth, and mitigates against potential bad debt losses. It needs to be available to support the provision of trade credit as well as finance, and providing credit reference agencies with the data to make better informed ratings and recommendations will be valuable.
“More business finance is provided through trade credit than through bank funding and more information leads to more, and better, decisions,” he adds.
The ICM was giving evidence alongside other leading business organisations including the Federation of Small Business (FSB), the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC), the Institute of Directors (IoD) and the Forum for Private Business (FPB). A key discussion was held around a suggestion to make the PPC mandatory, although a number of concerns were raised about the feasibility of such a proposal.
After giving evidence, Mr King praised the work of BIS which he said was clearly committed to helping small businesses: “BIS has listened and engaged with the ICM and other leading business organisations in a professional and constructive way but the devil is always in the detail. The Bill is an enabler for legislation and effective implementation will be vital in determining how successful it is.”
The video coverage from today’s session will be available here.
Please follow this link to view the Prompt Payment Code.
The Institute of Credit Management (ICM) is Europe’s largest credit management organisation, and the second largest globally. The trusted leader in expertise for all credit matters, it represents the profession across trade, consumer and export credit, and all credit-related services. Formed over 70 years ago, it is the only such organisation accredited by Ofqual and it offers a comprehensive range of services and bespoke solutions for the credit professional as well as services and advice for the wider business community, including the acclaimed ICM/BIS Managing Cashflow Guides.
For news, views and updates, follow the ICM on Twitter at www.twitter.com/ICMorg.
For further press information, please contact:
Sean Feast or Alex Simmons
Gravity Public Relations
T: +44 (0)207 330 8888