Business Minister: Name & Shame Late Payers
Michael Fallon, the Business and Enterprise Minister, has sounded out a warning to Britain’s big businesses that if they fail to sign up to the Prompt Payment Code (PPC) that they will be named & shamed.
The PPC is a voluntary code that encourages best practice between organisations and their suppliers in the prompt payment of invoices.
Late payments have continued to increase this year with over one million small businesses being subject to late payments.
The total amount owed to UK SMEs, as of early October, was a staggering £35.3 billion.
Michael Fallon has written to all the FTSE 100 and FTSE 250 companies asking them to sign up to the Prompt Payment Code. The names of the companies that fail to sign up to the code will be publicised in the new year.
Debbie Abrahams, the Labour Member of Parliament for Oldham East and Saddleworth, has also promoted the PPC under her Be Fair, Pay on Time campaign.
Whilst there are 1,182 companies signed up to the Prompt Payment Code, some 27 of the FTSE 100 and only 5 of the FTSE 250 have become signatories.
The Forum of Private Businesses (FPB) are also unimpressed with the lack of uptake to the code, with the Chief Executive, Phil Orford, condeming the code avoiders:
"All too often we see a ‘domino effect’ of late payment right down the supply chain. It decimates cash flow and forces many firms into administration – so it is important that we do whatever it takes to reverse this trend and set in motion a culture of prompt payment for small businesses and the economy as a whole."
As well as agreeing to pay on time, signatories to the Prompt Payment Code are committed to ensuring that appropriate processes are in place should problems arise with payments.
Speaking about his initiative, Michael Fallon added:
"Too many of our biggest companies are ignoring the Prompt Payment Code. My message to them is clear – make prompt payment a priority or face the consequences of being named. I’m confident that driving up support for the common sense principles in the code will have a very positive effect."
A spokesperson for the Department of Business, Innovation and Skills (BIS) said that no decision has been made as to where the identities of the named & shamed will be published, although Debbie Abrahams, MP, has already identified the supermarket giant Sainsbury’s as an offender on her facebook page.
Speaking to the Oldham Evening Chronicle, Abrahams summed up the problem of Sainsbury’s late payment conduct by pointing out:
"Can you imagine getting to the checkout and saying you’ll pay them in 75 days?"
The MP has even gone as far as calling for people to boycott Sainsbury’s.
The Institute of Credit Management (ICM) has also welcomed the code and the ICM Chief Executive, Philip King, has urged the Government to go further and make the Prompt Payment Code compulsory for any business that tenders for public sector contracts.
King stated that the Business Minister’s message;
"…would be even more convincing if he was to make signing the Code – and clearly demonstrating best practice in fair payment – a pre-requisite for any Government work. Public money should not be going to those firms whose payment practices stifle economic growth."
Businesses that appreciate cashflow and are willing to pay on time should sign up to the Prompt Payment Code where they will be publicly named & praised.