32 of the Government’s biggest suppliers have signed up to the Prompt Payment Code, which helps small businesses to be paid on time, committing to pay 95% of invoices with 60 days.
The code is administered by the Chartered Institute for Credit Management (CICM) on behalf of the Department for Business, Energy & Industrial Strategy (BEIS).
The Government also revealed that the 32 suppliers will aim to pay within 30 days, and will work towards making this the norm. The voluntary code of practice publicly signifies organisations’ commitment to fair payment terms to suppliers, especially smaller sized businesses.
Parliamentary Under Secretary of State in the Cabinet Office, Caroline Nokes, said: “This is a major boost to payment practices in the UK. Paying invoices on time is vital in providing healthy cash flow to smaller businesses, to help them survive and thrive.”
The Crown Commercial Service (CCS) encourages businesses to sign up to the Prompt Payment Code especially in the case of small businesses as it aids cash flow. It is estimated that small businesses in the UK are collectively owed more than £26bn in overdue payments.
Signatories to the code are major strategic suppliers who typically have contracts across government of more than £100 million. Together they account for around 40% of government procurement spend.
Small Business Minister, Margot James, said: “We want the UK to be the best place in the world to start and grow a business, but the UK’s small-to-medium-sized businesses are currently owed over £26 billion in overdue payments. Such unfair payment practices hamper a business’s ability to invest in growth, and have no place in an economy that works for everyone.
“It is only right that the Government should lead by example, and it’s great to see all 32 of our strategic suppliers signed up and committed to fair payment terms.”
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), commented: “It is good to see the Government fulfilling one of its manifesto pledges by getting big government contractors to sign up to the Prompt Payment Code.
“What the small business community needs now is further action to give the voluntary Prompt Payment Code even greater teeth. The Government should make it mandatory for all FTSE 350 businesses to sign up to the Prompt Payment Code and introduce a tough penalties regime for repeat offenders of poor payment practices.”