Getting paid on time is a big problem for many small businesses. However, there are steps being taken to ensure more small businesses are being treated fairly by those large companies who often keep them hanging on for payment for months on end. The Be Fair, Pay on Time campaign has already found backing from the Federation of Small Businesses (FSB) and the Forum of Private Business (FPB), and new efforts by the Business and Enterprise Minister, Michael Fallon, will hopefully mean more FTSE listed businesses participate in the scheme.
The Prompt Payment Code was launched in 2008 to encourage best practice in payment between organisations and suppliers. It has been run by the Institute of Credit Management (ICM) on behalf of the Department of Business, Innovation and Skills (BIS). It is now being backed up by the further campaign Be Fair, Pay on Time, in order to increase its uptake by big businesses.
Back in November, uptake on the scheme was still low – the Minister then said it could be worth naming and shaming those businesses who had failed to sign up. Only 25 of the FTSE 100 and 2 of the FTSE 250 were signed up to the code, not enough to really show a widespread commitment to prompt payment. Michael Fallon has now personally written to the remaining businesses, with 20 more FTSE 100 companies now successfully signed up in light of this new action.
Businesses from Associated British Foods, Diageo, Vodaphone, Standard Life, Royal Dutch Shell and more are now signed up to the scheme, but there are several notable exceptions. Sainsburys is one particular example – according to the FPB, Sainsburys has not only refused to sign up to the scheme, but has also extended its payment terms from 30 to 75 days.
UK small businesses are owed around £36.4 billion in overdue and late payments, so finding a solution to this problem is becoming an all important issue. Hopefully this new action on the Prompt Payment Code will be a vital step in getting more small businesses the payment they deserve.