Eighteen companies suspended from the Prompt Payment Code for failing to pay suppliers on time.
19th July 2019.
The Chartered Institute of Credit Management (CICM) has announced the suspension of 18 companies from the Prompt Payment Code for failing to to honour their Code commitment to pay 95% of all supplier invoices within 60 days.
The Government has pledged to crack down on late payments, with a new rule starting in September that will mean that any supplier bidding for government contracts above £5m a year will have to demonstrate their payment practices and could be excluded from the process if they are unable to do so.
In April, the Prompt Payment Code removed 5 companies and suspended 12 others for mistreating suppliers and ignoring rules of the code.
The five removed in April were – global mining giant BHP Billiton; logistics business DHL; engineer GKN; construction company John Sisk & Co; and Tea maker, Twinings & Co. The 12 companies suspended were: IT firm Atos IT services; Infrastructure business Balfour Beatty; err? sugar company British Sugar UK; infrastructure co – Costain Limited; Energy co Engie Services Limited; Services co Interserve Construction; Engineeering co Kellogg Brown & Root Limited; Construction co Laing O’Rourke; Buyilder Persimmon Homes; Engineer Rolls-Royce; Utility company SSE; and mobile phone company Vodafone Limited.
The suspension of 18 this quarter shows the attitude toward payment has not changed and the late payment culture persists.
The Prompt Payment Code’s Compliance Board, chaired by CICM’s Chief Executive Philip King, includes the Small Business Commissioner Paul Uppal, and regularly reviews the status of organisations to ensure they are upholding their commitments. Businesses suspended from the Code are invited to produce an action plan that leads to a substantial improvement in payment performance and are reinstated to the Code as soon as they demonstrate compliance.
Who was suspended this quarter?
Of the 18 suspended, 17 have committed or at least submitted an action plan to resolve the problem. They are:-
- Severfield (Design & Build)
- Stantec UK
- Screwfix
- Prudential
- British American Tobacco (Holdings)
- Galliford Try
- Alun Griffiths
- Ferrovial Agroman (UK)
- BAE Systems Global Combat Systems
- BAE Systems Applied Intelligence
- BAE Systems (Oman)
- Centrica
- Maintenance Management
- Fujitsu Services
- De La Rue Holdings
- Domino UK
- BT plc
One has been suspended with no action plan yet submitted:-
- AB World Foods
A sliver of good news at Atos IT Services
Atos IT Services UK Limited, which was included in a list of businesses removed from the Code earlier this year, has since been re-instated having satisfied the PPC Compliance Board that it is now meeting the standards and commitments of the Code.
What they said
CICM’s Chief Executive Phillip King 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.”
Small Business Commissioner Paul Uppal said “Large companies who are not currently meeting the Code Standards need to note their unethical payment practices will not be tolerated. The suspension of those who are failing to meet their obligations demonstrates Government is committed to ensure small businesses are treated fairly.”
Small Business Minister Kelly Tolhurst said: “As a former small business owner I know how damaging late payments can be. Although the vast majority of businesses pay their bills on time, we recently announced ambitious new measures to level the playing field for small businesses as part of our modern Industrial Strategy. These include plans to hold company boards accountable for payment practices and proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans.”
The Cabinet Office Minister for Implementation, Oliver Dowden said “Paying invoices promptly is vital, particular for smaller businesses, who are the backbone of the UK economy. So I hope that the companies who have been suspended from the code will now get their act together and work hard to improve their performance. From September 1st, 2019, any supplier who bids for a government contract above £5m per annum will be expected to answer questions about their payment practices and performance. If they are unable to demonstrate that they are paying 95% of invoices within 60 days, they may be excluded from the process.”
Federation of Small Businesses National Chairman, Mike Cherry, said “It is right and proper to suspend big businesses for poor payment practices. This second wave of suspensions indicates that the Government is getting serious about tackling the late payments crisis in the UK and that this sort of behaviour will no longer be tolerated. Positive steps like this and the package of measures announced last month by the Government, are vital in shifting the balance of power away from big business that for too long have got away with mistreating small suppliers.
“Historically the code was a good idea, however in practice it has been used by companies like Carillion to claim to be prompt payers. We still need to see wholesale reform of the Code when it moves officially under the Commissioner later this year. Late payers have no place in Government supply chains. Late payment is bad for small businesses, bad for public services and bad for the taxpayer.”
What is the code? – The Prompt payment code
The Voluntary Code is administered by the CICM on behalf of the Department for Business, Energy and Industrial Strategy (BEIS). Signatories pledge to uphold its best practice for payment standards to end the culture of late payment.
1. Pay suppliers on time
Within the terms agreed at the outset of the contract
Without attempting to change payment terms retrospectively
Without changing practice on length of payment for smaller companies on unreasonable grounds
2. Give clear guidance to suppliers
By providing suppliers with clear and easily accessible guidance on payment procedures
By ensuring there is a system for dealing with complaints and disputes which is communicated to suppliers
By advising them promptly if there is any reason why an invoice will not be paid to the agreed terms
3. Encourage good practice
By requesting that lead suppliers encourage adoption of the code throughout their own supply chains
visit the prompt payment code site
Visit the website payontime.co.uk and become a supporter to show your support for late payment legislation.
What CPA says
Last month we wrote about the new government proposals to tackle late payments.
You can see the Governments full document here : Creating a responsible payment culture: a call for evidence in tackling late payment: government response
We responded to those proposals in this blog, pointing out the gaps in the plan
That 18 more companies have been suspended this quarter after 17 fell foul of the code last quarter, shows that the late payment culture still has a stranglehold on the UK economy. Until the culture ends of making suppliers wait well beyond reasonable credit terms for payment, the UK economy will never meet its full potential.
We need to move to an environment where companies look to pay suppliers as quickly as possible. 30 day terms provide plenty of time to process, authorise and arrange payment. Too many companies don’t even start that process until the invoice becomes due, or indeed is already late.
On the due date, the money should be cleared in their suppliers account.
When the goods or services were ordered, delivery was expected on time. Why should the payment not be treated with as much conscientiousness.
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
See the section below – About CPA.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Keep up to date with the latest news by following us on social media:-
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Read our Cash Flow Advice
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Read our blog -Credit Management that works!
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see our blog – 15 steps to avoid invoice fraud
Read our blog – Communicating with your debtor
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections