Rolls Royce protests, We pay our bills quickly.
James Salmon, Operations Director.
1st May 2019.
Rolls Royce has blamed government number crunchers for having its membership of the Prompt Payment Code suspended.
The Prompt Payment Code (PPC) requires firms signed up to pay 95% of supplier invoices within 60 days.
A review of whether companies are meeting the standards was completed in its first phase and the process identified 17 companies to be either removed or suspended.
CPA wrote yesterday about big companies accused of ‘ignoring rules’ over paying their suppliers
The five to be removed are: global mining giant BHP Billiton; logistics business DHL; engineer GKN; construction company John Sisk & Co; and Tea maker, Twinings & Co.
The 12 companies that are being suspended are: 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.
Rolls Royce
The engineering group is one of the government’s most important contractors, supplying engines and support to the armed forces.
However, in the review of the government’s prompt payment code, Rolls-Royce was one of 12 above companies had their membership suspended.
Rolls Royce has said that it had fallen foul of how its numbers were counted.
Rolls-Royce has said it is “disappointing” that the engineering giant has been suspended from a government code after it failed to pay at least 95 per cent of its supplier invoices within 60 days.
It said that administrators of the code had failed to take into account how payments on long-term contracts to its largest suppliers operated on mutually agreed standardised 75-day terms.
Nor, Rolls said, had they taken account the 30-day terms on which its smaller suppliers operate. It said that 90 per cent of its suppliers were paid in 60 days or less.
“This non-compliance assessment is disappointing as we are demonstrably committed to the fair and appropriate treatment of all our suppliers,” it said.
The Derby-headquartered company said that recent changes made to the assessment criteria for the Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM), resulted in its suspension.
Rolls Royce statement
In a statement, Rolls-Royce said: “This non-compliance assessment is disappointing as we are demonstrably committed to the fair and appropriate treatment of all our suppliers.
“We look forward to working with CICM and the Prompt Payment Code Compliance Board to assist them in gaining a clearer understanding of the way in which we differentiate between large suppliers and smaller suppliers, who we believe merit additional assistance.
“We make well over 500,000 payments to suppliers every year and adopt a flexible approach which matches payment terms to the requirements and capabilities of our suppliers.
“Firstly, we differentiate between our smaller suppliers, whose interests the code champions, and our larger suppliers, applying appropriate and jointly agreed payment terms to each.
“A shorter preferred payment term of 30 days end of week, is available for our many smaller suppliers around the world.
“Secondly, we consider the option of early payment to suppliers who are facing financial constraint.
“Thirdly, we offer supply chain financing, at attractive rates, which enables our suppliers to receive their payment sooner if they wish.
“This approach, together with our commitment to shorter payment terms for smaller suppliers, was sufficient for us to meet the criteria when we signed up to the code in 2012, and were re-confirmed in 2016.
“Nothing has fundamentally changed in our approach since then – as a group we pay around 90 per ceny of our invoices on time.
“We have long-term contracts with larger suppliers where payment terms have been mutually agreed at 75 days end of week.
“Previously we were able to balance these against the more preferential treatment we offer smaller suppliers, and remain compliant with the code. Following a change in assessment approach, this is no longer the case.
“We continue to believe the way we have designed our payment terms is in keeping with the spirit of the code.
“However, the significant volume of invoices we receive from our large suppliers – and the removal of the consideration of our preferential treatment for smaller suppliers – has pushed us below the compliance criteria as it is now being assessed.”
Do you have a problem with late payments?
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 bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply to businesses 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.
Do you realise you may have hidden capital tied up in your business?
No need to run to banks of other finance providers
Do you realise you may have a hidden source of capital within your business waiting to be activated?
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.
That compensation could be the cash injection your business needed.
Are you thinking about retiring, closing the business down or going into insolvency? If so this compensation could be an excellent way to maximise the return you get for their years invested in the business.
If you collect the compensation you are due on late payments then you could create a nice nest egg from the business or find the funds to rescue it from insolvency.
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 hardwork. 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.
The Credit Protection Association plc (established 1914) has spent 3 years researching the accounting, technical and legal implications of Late Payment Legislation and our staff and retained solicitors probably have as much working knowledge of this legislation as could be found anywhere.
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 companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
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 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 cash-flow, 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 cashflow.
Don’t let your bankers control you, contact CPA today.
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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!
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