Prompt Payment Code: More FTSE 100 Firms Sign Up
Business and Enterprise Minister, Michael Fallon, has written a second round of letters urging FTSE 100 and FTSE 250 companies to sign up to the Prompt Payment Code.
The Minister has already contacted all the FTSE listed businesses and only 25 of the FTSE 100 and 5 of the FTSE 250 had signed up to the code.
Such a low uptake prompted Fallon to say, back in November, that maybe those big businesses that fail to sign up to agree to pay on time should be named and shamed.
Run by the Institute of Credit Management (ICM) on behalf of the Department of Business, Innovation & Skills (BIS) the Prompt Payment Code was launched in 2008 to encourage and promote best practice in payment between organisations and suppliers.
Be Fair, Pay On Time
The Prompt Payment Code is backed up by a campaign to promote its uptake – Be Fair, Pay on Time; championed by MP for Oldham East & Saddleworth, Debbie Abrahams.
MP Abrahams said that when she was elected into office in 2011 one of her constituents informed her that his business was on the brink of going under because of late payers. Despite contractual obligations of 30 days, large companies were taking up to 90 days and sometimes even longer, to pay their bills.
The Be Fair, Pay on Time campaign is further supported by business groups the Federation of Small Businesses (FSB) and the Forum of Private Business (FPB).
With just 25 FTSE 100 companies signing up to promise that they would be fair and pay on time, Michael Fallon wrote to the remaining 75 FTSE 100 firms to try and get them onboard.
20 more firms have signed up to the PPC.
The big names that have now agreed to sign up to the code include Associated British Foods, BHP Billiton, British American Tobacco, Burberry, Diageo, Kingfisher, Royal Dutch Shell, Standard Life and Vodafone.
The campaign are still hoping to sign PubCo Whitbread and supermarket chain Morrisons but one big name has refused to sign up – Sainsbury’s.
According to the FPB, Sainsbury’s not only flat refused to sign up to agree to pay their suppliers on time but even extended the terms of their payment agreements from 30 days to 75 days. Abrahams described the late payment of smaller suppliers as a "repulsive and unacceptable business practice".
MP Debbie Abrahams said of the latest initiative:
"We should give credit to the 20 global companies who have agreed to sign up to the Prompt Payment Code as they are leading by example and committing to help SMEs across the UK. It shows they recognise how their actions affect the thousands of hard-working SMEs across the UK and that they are ready to be held accountable for their actions."
Philip King, the ICM’s Chief Executive Officer, added:
"We welcome any initiative that supports a culture of prompt payment, and the work of those in government and opposition to bring payments to the front of the business agenda. The certainty of payment is critical to small businesses to help manage their cashflow, especially in the current economic environment."
UK small businesses are owed a staggering record £36.4 billion in overdue payments according to research conducted just over a month ago. That figure is up on the previous year as late payments to small businesses continue.