Businesses ignoring Prompt Payment Code to be named
Big businesses that do not sign up to the Government's Prompt Payment Code (PPC) will be publicly 'named and shamed', business minister Michael Fallon has warned.
Under the PPC, larger companies agree to prompt payment practices including paying suppliers on time and following agreed processes for any issues that may arise.
Fallon has written to the UK's 350 largest companies urging them to sign the voluntary code which has been in operation since 2008. Those who fail to agree will have their name publicised in the New Year.
The move comes as small businesses continue to suffer from cash flow problems - and consequently growth problems - resulting from delayed invoice payments.
Research from the Federation of Small Businesses (FSB) found that the vast majority of small businesses (73 per cent) have experienced late payment for their goods and services within the last 12 months.
Elsewhere, research from the BACs Payment Schemes Ltd, the company behind Direct Debit, said that a million businesses are suffering from late payment of bills with a collective debt reaching £36.4 billion.
Making the announcement, Michael Fallon said: "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."
So far, 1,182 companies have signed the code, yet only 27 FTSE 100 companies and five FTSE 250 companies have agreed to the terms.
Welcoming the move, the chief executive of the FSB Phil Orford said: "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."