Britain’s continuing problem of large companies that delay payment to suppliers has been highlighted as 18 companies are suspended from the UK government’s prompt payment code (PPC), a pledge to pay 95% of invoices within 60 days.
These businesses have now been suspended from the PPC, which means they can no longer use government branding or say they are signatories of the code. Each must now work with the Chartered Institute of Credit Management (CICM) if it wishes to be reinstated.
The latest suspensions come after 17 other businesses, including Vodafone, were removed or suspended in April. Among the latest 18 are defence, security and aerospace group BAE Systems, energy and services company Centrica, life assurance and financial services group Prudential and Associated British Foods (ABF), whose brands range from Primark to Twinings.
CICM chief executive Philip King, who administers the PPC on behalf of the UK government’s business, energy and industrial strategy department, said: “We will continue to challenge signatories to the code if the obligatory payment practice reporting data suggests that their practices are not compliant.
“We are encouraged that of the 18 who have been suspended or removed today, all but one has already submitted action plans to achieve future compliance, and we are working closely with those businesses to support a better payment culture.”
According to reports, ABF is the company that has yet to promise an action plan in response to their suspension.
Stuart Mackinnon, external affairs manager for Scotland at the UK’s Federation of Small Businesses (FSB), said, “We need to get tough with those big businesses that abuse their suppliers and use them as cheap credit.
“These suspensions hopefully demonstrate a change of attitude at the top toward late paying big businesses. Across the UK, we need to see the next prime minister force the biggest businesses to behave responsibly toward their supply chains.”
According to the FSB, 50,000 businesses go into insolvency annually as a consequence of late payments.
The government’s prompt payment code has been criticised in the past for not acting against signatories that breach the code’s principles but has recently been enforced more tightly.
One new rule due to be introduced in September will see any supplier bidding for a government contract above £5 million (US$6.1 million) a year will be expected to answer questions about their payment practices and performance. If unable to demonstrate that they pay 95%of invoices within 60 days, they may be excluded from the process.
“Large companies who are not currently meeting the code standards need to note their unethical payment practices will not be tolerated,” said small business commissioner Paul Uppal.
“The suspension of those who are failing to meet their obligations demonstrates that the government is committed to ensure small businesses are treated fairly.”
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