CICM says Code playing its part in improving payment practices
Press Release – 21 July 2017
Code celebrates 2,000th signatory and now comprises more than 70 percent of the FTSE100
The body that administers the Prompt Payment Code (PPC) on behalf of the Government says that the Code is having a demonstrable impact on improving the payment practices of larger firms.
As the Code registers its 2,000th signatory, The Chartered Institute of Credit Management (CICM) points to a series of recent announcements from supermarkets and other large suppliers to change their payment terms as a victory for the Code and its principal objective of changing the culture of late payment.
It also identifies a recent announcement from 32 of the biggest suppliers to the Government who have voluntarily committed to pay 95 percent of invoices within 60 days – and to work towards adopting 30 days as the norm.
With almost three quarters of the FTSE100 now signed up to the Code, Philip King, Chief Executive of the CICM, says that the initiative continues to gain momentum and credibility: “It is important that businesses large and small recognise the Code as a tool that can help improve payment practices and the understanding of the supply chain.”
Mr King’s comments coincide with the latest data from Bacs that shows that overall late payment debt has fallen considerably since the Code was introduced. Figures reveal that UK SMEs are owed £14.2bn in contrast with five years ago when the total was more than double, at £30.2bn.
“This is undoubtedly good news,” Mr King continues. “The Code is one of a series of measures introduced in recent years to address the late payment challenge, and while this latest news should be welcomed, there is still a long way to go.”
Margot James, Minister for Small Business, says the Prompt Payment Code continues to go from strength to strength: “Unfair payment practices have no place in an economy that works for all. The Prompt Payment Code is a big step forward in eliminating these behaviours and improving relationships between big businesses and their smaller suppliers.
“It is heartening to see that so many businesses have committed to treating their suppliers fairly and equitably, and I look forward to seeing the number of signatories continue to rise.”
Out of the 1.7 million SMEs in the UK, almost 640,000 say they have to wait beyond agreed terms for payments. Scotland has the highest percentage of SMEs reporting late payment issues (46 percent), followed by Northern Ireland (39 percent), England close behind (37 percent) while just over a third of Welsh SMEs (34 percent) say they experience late payments.
Almost one in five (19 percent) of SMEs affected by overdue settlement admit that being owed between £20k and £50k would be enough to drive them into bankruptcy, with 7% of businesses saying they are already in that danger zone.
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The Chartered Institute of Credit Management (CICM) is the largest recognised professional body in the world for the credit management community. Formed over 75 years ago, the Institute was granted its Royal Charter in 2014. Representing all areas of the credit and collections lifecycle, it is the trusted leader and expert in its field providing its members with support, resources, advice, and career development as well as a networking and interactive community. In addition to its comprehensive suite of qualifications and learning opportunities, events and magazine ‘Credit Management’, the CICM administers the Prompt Payment Code for BEIS. Independently, and through collaboration with business organisations, it provides vital advice to businesses of all sizes on how best to manage cashflow and credit.
Linkedin: CICM Credit Community