Views sought on strengthening the Prompt Payment Code
The Institute of Credit Management (ICM), in partnership with the Department for Business, Innovation and Skills (BIS), has launched a survey to seek feedback on how to improve enforcement of the Prompt Payment Code.
The Code seeks to spread good practice across both the public and private sectors. Signatories to the Code commit to paying their suppliers within agreed and clearly defined terms, and commit also to ensuring that there is a proper process for dealing with any issues that may arise.
A new joint ICM-BIS survey will test initial proposals to strengthen the enforcement mechanisms of the Code. This includes setting up an Enforcement Board, which could have powers to remove a signatory from the Code. Views are also being sought on whether a maximum payment term should be introduced for Code signatories.
Chief Executive of the Institute of Credit Management, Philip King, said: “The ICM is committed to working closely with BIS to further strengthen and refine the Prompt Payment Code. Clearly this is something that we want businesses to willingly and honestly engage with, and not simply become a ‘tick box’ exercise, but it is important that we explore proposals for new initiatives such as an Enforcement Board to ensure the integrity of the Code is maintained.
Business Minister Matthew Hancock said: “Late payment is entirely unacceptable and I am determined to make sure that small businesses are treated with the respect they deserve.
“The Prompt Payment Code should crack down on poor practice and we want to hear how businesses think the code can be strengthened.”
The overall level of late payment owed to small and medium sized businesses is approximately £40 billion, according to BACS figures. The ICM and BIS are working together to tackle this complex and challenging issue.
Alongside the survey on strengthening the Code, BIS has separately published a new consultation on the proposal to nullify the ban on invoice assignment.
The Government believes the use of invoices as collateral for loans should be a viable funding method, but too often bans on assignment create extra costs for businesses. In some cases these can block finance and even lead to insolvency.