Signatories of the Prompt Payment Code (PPC) will today receive a letter announcing the formal launch of the new PPC website and confirming a series of changes to payment commitments that all signatories will now be obliged to follow.
The letter, signed by the Matthew Hancock, the Minister of State for Business and Enterprise and Minister of State for Energy and Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM) also includes a timeline by when these changes need to be implemented.
The existing Prompt Payment Code principles will remain: to pay suppliers on time, give clear guidance to suppliers and encourage good practice. The Prompt Payment Code will now, however, promote 30-day payment terms as the norm and include a maximum 60-day payment term (defined as paying 95% of invoices within 60 days, unless there are exceptional circumstances).
Signatories will be asked to undertake to avoid any practices that are grossly unfair and adversely affect their suppliers, and to report annually (for small and medium sized signatories) on payment performance, on a comply or explain basis, and half-yearly (for large signatories) in line with the new statutory reporting requirement. A new Compliance Board has also been appointed with a monitoring and enforcement role and to impose sanctions for non-compliance including expelling signatories from the Code if required.
Philip King says that the CICM is pleased to be working with government in driving best payment practice: “Together, we can ensure that Prompt Payment Code membership really is a badge of honour, inspiring confidence and a strengthened relationship with suppliers, and – at a time of increased public scrutiny – enhancing an organisation’s reputation.”
Mr King says that the Code and the ‘challenge’ process have already been a success but that further support is welcome: “Signatories are being encouraged to comply with the strengthened code now, before the changes are enforced in 2016,” he added.
The PPC, which currently has more than 1,800 signatories, is administered by the Chartered Institute of Credit Management (CICM) for the Department for Business, Innovation and Skills (BIS). It was launched in 2008 and continues to receive cross-party support.