The prompt payment code is aimed at helping small businesses to get the payment owed to them by larger companies, giving them extra leverage and hopefully improving their cash flow situation. The PPC is being pushed by the government and more companies are signing up – the number of FTSE 350 companies signed up has tripled following a new push by the government. But will this bring about better regulation against late payment?
There has been a lot of government action on this issue. In November, Business Minister Michael Fallon wrote to big businesses urging them to sign up PPC or else be publicly named and shamed. From this, an additional 94 FTSE 350 companies have signed up, taking the total to 126. Another two dozen smaller non-FTSE companies have also committed to support the PPC – 3 out of 4 FTSE 100 companies have now signed up.
This includes big businesses such as Shell, Kingfisher and Diageo, and these are just some of the businesses leading the way in working with small and medium sized businesses. Supply chains are often made up of a variety of business sizes, all interdependent on one another – that just shows the importance of the PPC and in finding a payment system that works for all involved.
Business Minister Michael Fallon said: “Late payment is a real issue for businesses across the country. It is not fair and poor cash flow can prevent small firms growing and even push them into insolvency. We need to improve the payment culture and I welcome the response of big businesses in signing up to the common sense principles in the Prompt Payment Code.
“Signing up demonstrates a serious pledge to pay promptly. Reports of any companies found to be falsely committed to the value of fairness in the Code will be taken very seriously.But the work will not stop here. I will keep up pressure on firms to sign up and continue to ensure government leads by example in paying its suppliers on time. Central government has a good record. Now, I will be challenging other parts of the public sector to show their commitment to the principles of the Code.”