Businesses fail to meet Prompt Payment Code

There’s been an increasing clamour round the issue of late payment in recent weeks. Much of this has been driven by the suspension of a number of businesses from the Prompt Payment Code for failing to meet the requirements that they voluntarily signed up to. The relevant press releases can be seen here and here.

The non-compliance has not been identified by suppliers complaining about how they are paid. Rather, it has become apparent through the Payment Practices Performance data submitted to the government portal by the organisations themselves.

Much of my time is currently being spent meeting with these organisations and others who want to improve their performance and get reinstated to the Code. The process involves the submission of an action plan setting out what the organisation is doing to achieve compliance, and I am enjoying working with many of them in supporting that aspiration in practical ways. My discussions are, for obvious reasons, confidential but I wish I could share some of them. They’re positive, encouraging and, in some cases, nothing short of inspirational.

What has been interesting to me throughout this time is that, contrary to views often expressed in the media and elsewhere, the majority of these organisations genuinely want to pay suppliers more quickly. Many recognise the importance of their supply chain and put great effort into supporting it and ensuring it is sustainable. The smart ones understand that the quality of their offering can be dependent on the quality of the supply chain and making it stronger is in their own interests as much as in anyone else’s.

In many cases, the reasons for not achieving compliance are more about process than intent, and the action plans being produced are addressing inherent weaknesses that can be addressed by devoting sufficient time and attention to them.

The impact of late payment, of course, goes far beyond a simple hit on cashflow. Its longer-term effects can damage businesses, mental health, jobs, competition, the economy, and far more.