Getting back on the prompt payment code

Failing to meet Prompt Payment Code Standards

If you fail to meet the Prompt Payment Code (PPC) Standards, you risk being suspended from it.

I met with John O’Connor, Group Commercial Director at Laing O’Rourke Construction Limited for an update on the company’s journey to improve its payment practices. The company was one of a number of companies suspended from the Prompt Payment Code (PPC) announced in April 2019 for failing to meet the standards of the Code. Its previous submission to the government’s Payment Practices reporting portal showed just 59% invoices paid within 60 days.

Getting back on

Laing O’Rourke developed and implemented an action plan to achieve compliance that resulted in the business being reinstated to the Code in November, and the journey of improvement is continuing with 93% invoices paid within 60 days in December. The improvement is nothing short of transformational and I’ve seen several similar improvements of this magnitude at various companies in recent weeks and months. 

How to get back on the Prompt Payment Code

The company took basic steps to improve supplier payments. It has talked to its suppliers and worked with them to implement processes that benefit both parties; it has enhanced its use of technology internally to speed up the matching of orders to delivery documentation and invoices; it has increased the availability of technical solutions to suppliers allowing invoices to be submitted, tracked and monitored. Equally importantly, it has raised the visibility of its payment performance to the highest levels and reports regularly on progress. The focus on improving supplier payments and, as a consequence, supplier relationships is driven from the top down and is permeating through the business at every level.

As we see more businesses take the sort of positive steps Laing O’Rourke has taken, we will also see an improvement in payment culture and business relationships. The winner will be UK plc and the wider economy.