Prompt Payment Code – how effective and how to learn from it
Late payment facts
• £2.5bn lost to economy annually
• Average small business owed £24,841
• Causes 50,000 businesses to fold each year
• End to late payments could create 3.4m jobs
Payment Code (“PPC”) is a voluntary scheme
to standardise payment terms between businesses. Under the scheme Businesses send
their payment records twice a year to the Government who are put details on
include local Councils, Bupa, Banks and British Airways Plc.
Signatories aim to: –
within the agreed terms;
clear guidance to suppliers;
good practice; and,
To pay suppliers within a
maximum of 60 days (in line with late payment legislation requirements),
to work towards adopting 30 days as the norm.
Late payments are worth almost £25,000 a year and an average of 50,000 small businesses fold every year because of cash flow problems.
The New System
smaller businesses will be warned which businesses have a poor record of paying
suppliers on time.
which fail to report their payment records will also be highlighted.
importance of a good payment record may affect a supplier’s reputation if
records are available to the public. In July 2019 you
may have seen that eighteen companies
– including BT
Plc, British American Tobacco, and Centrica – have been
suspended from the Prompt Payment Code for failing to pay suppliers on time.
are concerns of the effectiveness of the PPC as it does not have investigatory
powers nor award fines.
August 2019 the Government stated it will only award public contracts to
companies that can show prompt payment to their own suppliers.
Steps your business can take:
your customer or supplier’s latest accounts before signing a contract – either
on Companies House website (free to use) or using Experian;
payment terms of the contract – make the terms longer or shorter depending on
the customer/ supplier [check the PPC’s website to see if a supplier is a
in your terms and conditions that further interest will become due on any
a copy of all correspondence (emails, letters and notes of calls) with your
supplier/ customer this may proof useful at a later date if any dispute is
specialised advice – please contact our friendly team for further assistance.
Collection Centre is a specialist debt recovery service offered by city law
firm Devonshires offering a one-stop-shop for businesses suffering from late
payments. The team sends an initial letter before action on a no-collection,
no-fee basis and progresses the matter in-house through the Courts using the
firm’s specialist solicitors. For speedy assistance in recovering money owed,
please contact our specialist team.