Writing to the FTSE 350, Business Minister Michael Fallon said: “Too many of our biggest companies are ignoring the Prompt Payment Code. My message to them is clear – make prompt payment a priority or face the consequences of being named.”
The Prompt Payment Code was set up four years ago as a “voluntary” agreement to pay suppliers quickly. Currently 1,182 companies are signed up to the Code, of which only 32 are in the FTSE 350.
According to research by payments firm BACS, the average UK small business is owed £45,000 in late payments. This is a total of £35bn for all SMEs in the UK, and is the highest level BACS has recorded since it started monitoring late payment in small firms.
“Late payment causes real cash flow problems for entrepreneur,” wrote Fallon. “It stops them from growing their business – we need to change the culture.
“I’m confident that driving up support for the common-sense principles in the code will have a very positive effect.”
Phil Orford, CEO of the Forum of Private Business, welcomed the Business Minister’s letter. He says: “All too often we see a domino effect of late payment right down the supply chain. It decimates cash flow and forces many firms into administration, so it is important that we do whatever it takes to reverse this trend and set in motion a culture of prompt payment for small businesses and the economy as a whole.”
While all signatories of the Prompt Payment Code are already publicly available online, the government wants to be more pro-active in highlighting companies that are not committed to the code.
The topic of late payment has rapidly risen up the agenda as the Coalition seeks to find ways to make business easier. A debate on prompt payment issues will take place in Parliament later today.
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