DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/296)
issued by COI News Distribution Service. 10 December 2008
Business Secretary
Lord Mandelson today launched a new Code of Practice to help
increase the speed of payments to smaller companies.
The code was launched at a prompt payment summit, where Lord
Mandelson met representatives from some of the UK's top
companies including John Lewis Partnership, British Gas and Asda.
The code, developed with the Institute of Credit Management and
supported by major business organisations, aims to establish a
clear and consistent policy in the payment of business to business bills.
The Institute of Credit Management will host the code on its
website and will include a facility for suppliers to raise
concerns about late payers.
Business Secretary Lord Mandelson said:
"I am very pleased we have been able to reach agreement on
the code today. The code focuses on ensuring firms pay their
suppliers on time and do not attempt to change their payment terms
retrospectively. This will be essential to help smaller firms
maintain cash flow in the months ahead.
"I want the maximum number of businesses to sign up to it
and I will be convening another meeting in a month's time to
track progress."
The Code of Conduct, which leading suppliers are urged to sign,
focuses on three main areas:
- A commitment to pay suppliers on time;
- To give clear guidance to suppliers; and
- To encourage good practice.
Philip King, Director General of the Institute of Credit
Management (ICM) said:
"Cash flow keeps business in business, and the Prompt
Payment Code we're launching today with BERR will help to
bring businesses certainty in this increasingly difficult climate.
"We are delighted to be hosting this initiative on our
website, which builds on our 'Treating suppliers fairly'
guide, part of the 'Managing Cashflow' series we
recently produced with BERR."
The summit follows a commitment by central Government to pay its
suppliers within ten days.
The summit also focused on good practice examples and discussed
in detail what measures should be adopted to ensure suppliers are
paid on time.
Notes to Editors:
The Prompt Payment Code
* 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.
* Give clear guidance to suppliers
- providing suppliers with clear and easily accessible guidance
on payment procedures;
- ensuring there is a system for dealing with complaints and
disputes which is communicated to suppliers;
- advising them promptly if there is any reason why an invoice
will not be paid to the agreed terms.
* Encourage good practice
- by requesting that lead suppliers encourage adoption of the
code throughout their own supply chains.