Big companies accused of ‘ignoring rules’ over paying their suppliers.

James Salmon, Operations Director.

30th April 2019.

Chartered Institute of Procurement & Supply

More than a thousand big companies are flouting the law by ignoring rules that oblige them to report how long they take to pay suppliers, an industry group has warned.

An analysis of government data by the Chartered Institute of Procurement & Supply (CIPS) highlighted a significant number of large companies that had not complied with their “duty to report” under rules designed to stamp out late payment of invoices.

Since 2017, large businesses have been required to publish reports on payments to suppliers at least twice a year. About 15,000 companies should have reported by now, but fewer than 14,000 submissions have been recorded on the government portal, leaving over 1000 who are ignoring rules.

The institute, which represents supply chain professionals, said that the government must police the rules and ban those ignoring rules who cannot show that they pay suppliers on time from government work. It added that the data that had been filed showed that the average large business paid almost one on three of their invoices late.

Malcolm Harrison, chief executive of the institute, said that “serial late payers” must be “held to account”.

Chartered Institute of Credit Management.

The CIPS research was published as the Prompt Payment Code, a voluntary scheme designed to promote good payment practice, removed or suspended seventeen companies for mistreating suppliers and ignoring rules of the code. The firms have been removed or suspended from the Government’s Prompt Payment Code for failing to pay suppliers on time. The 17 UK companies were shamed during the last three months for failing to meet standards set by the Chartered Institute of Credit Management.

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.

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.

The Prompt Payment Code was created by the UK government in 2008 in response to a call from businesses for a change in payment culture.

Businesses suspended from the Code have been invited to produce an action plan setting out how they will achieve compliance within an agreed period.

When they have achieved compliance their status as a Code signatory will be reinstated. If they do not, then they will be removed.

Ignoring rules

Philip King, chief executive of CICM, said: “The Board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.

“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the Code.”

The round of suspensions builds on a government announcement in November, where failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts.

Those ignoring rules would miss out on the valuable work.

From September this year, any supplier who bids for a government contract worth above £5m a yearwill be required to answer questions about their payment practices and performance.

The expected standard is to pay 95% of invoices in 60 days across all their business.

Any supplier who is unable to demonstrate that they have systems in place that are effective and ensure a fair and responsible approach to payment of their supply chain may be excluded from bidding.

Prompt Payment Code

Kelly Tolhurst, Minister for Small Business said: “The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain.

“We remain committed to supporting small businesses against poor payment practice and are delighted to see that the Prompt Payment Code Compliance Board has acted to expose those whose payment practices fall outside of their obligations to treat suppliers fairly.”

BHP Billiton, the miner, DHL, the logistics business, and GKN, the aerospace and automotive parts group, were among those “named and shamed” for failing to “meet the standard” and removed from the scheme for “non-compliance and not providing a plan for how they will meet the terms of the code”.

A further 12 businesses have been suspended from the code for not paying suppliers on time, although the Chartered Institute of Credit Management, which administers the code, said that these businesses had “committed to make changes to meet the standards”.

The voluntary prompt payment code is supported by government and sees signatories agree to pay suppliers on time and to treat them fairly.

From September this year, any supplier who bids for a government contract worth more than £5 million a year will be required to answer questions about their payment practices and performance. The expected standard is to pay 95 per cent of invoices within 60 days.

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. Spot those companies ignoring rules on payment and treat them appropriately.

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?

There is no need to run to banks of other finance providers for extra capital.

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.

For years the businesses you sold to were ignoring rules on payment. Now you can be recompensed  for their ignoring rules and paying you late.

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.

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

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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!

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