Prompt Payment to Suppliers
businesses face winding up because of late payment.
signatories to the Prompt Payment Code.
Why Prompt Payment to Suppliers Matters
Every year small businesses go out of business because they are not paid on time. They can be bullied into having to accept long payment terms or suddenly subject to monies being withheld.
Paying promptly is a matter of respect – simply doing for others what you would also like to happen to you. Too often it is seen as an operational issue – but should be something boards address and are aware of as part of being socially responsible. It shows respect to your suppliers and treats them as you would wish to be treated.
Our Stance On – Special Exceptions to the PPC
We recognise that for some sectors the Prompt Payment Code is difficult to commit to such as where the industry norm is 60+ days payment terms or where short payment terms are not feasible because of the transit time from despatch to goods received. Where terms are mutually agreed, not unilaterally imposed on suppliers, not signed under duress by them, and paid to agreed terms, we will allow an organisation to join the GBC without signing the PPC. Instead, we will ask members to sign a separate commitment confirming their good intent and adherence to these conditions.
There are also some issues with the strengthened Prompt Payment Code for organisations knowing which companies fall into the ‘small supplier’ category because of not knowing how many employees a supplier may have. Our main consideration for this component is that small suppliers are not bullied into accepting unfair payment terms by large customers and to this end we have designed a statement that seeks to ensure that the rights of small suppliers are protected.