Posted: Tue 25th Jul 2017
The last government started a number of initiatives to improve late payment in the UK. Clive Lewis, head of enterprise at ICAEW, provides an update on where the various efforts stand.
Prompt Payment Code
In summary the changes to the code required signatories to commit to 60 days maximum period for payment of invoices, signatories would be required to provide five references (rather than the previous two) and a new code compliance board was created to ensure signatories operated with the terms of the code.
There has been an increase in signatories and the code is very close to achieving 2,000 signatories and all strategic suppliers to government are now signed up.
The additional referees are now obtained, and followed up, as standard.
The number of signatories providing additional information (such as the How to Get Paid guide) is steadily increasing.
The Board has dealt with very few cases because almost all challenges are resolved quickly by the Chartered Institute of Credit Management (CICM), who manage the code without the need to involve the Board.
Over the past couple of years well over £2m has been paid, often immediately, as a result of the Code's intervention and dialogue between supplier and buyer has been initiated and improved.
Large companies' duty to report payment practices and performance
The Payment Practices Reporting Regulations came into force on 6 April 2017 and require large businesses to report their payment practices and performance by providing prescribed information.
Some large businesses will start to publish reports from October 2017. By the end of November 2018, the majority of large businesses will have begun to publish reports.
The government has set up a website which assists large companies to find out if they need to report and if so to identify their reporting deadline. The site will also host the reports provided by businesses.
Later in the year the site will enable small businesses to search for businesses’ published payment practice and performance.
Small business commissioner
The Enterprise Act created a new role for a small business commissioner.
The Commissioner will:
enable small businesses to resolve disputes and avoid future issues through general advice and information
signpost to appropriate services e.g. sector ombudsmen or regulators, existing independent advice services, approved alternative dispute resolution (ADR) providers or the Commissioner’s own complaints handling function
consider complaints by small business suppliers about payment issues with larger businesses that they supply
Perhaps the most powerful tool that the Commissioner will possess is that they will make an annual report to the secretary of state on the effectiveness of the current late payment measures and make recommendations for change
The appointment has been delayed by the General Election but it is anticipated that an appointment of the small business commissioner will be made later this year.
Groceries Code Adjudicator
The Groceries Code Adjudicator (GCA) is the UK's first independent adjudicator to oversee the relationship between supermarkets and their suppliers.
It ensures that large supermarkets treat their direct suppliers lawfully and fairly, investigates complaints and arbitrates in disputes. The GCA works with the Department for Business, Energy & Industrial Strategy.
If you are supplying or considering supplying one of the big supermarkets you would be advised to consult a league table of supermarkets ranking by how they fairly treat their suppliers.
Late payments, unfair charges and no compensation for supply forecasting errors were identified as the biggest issues facing suppliers.
Get a free advice session
The ICAEW Business Advice Service (BAS) offers businesses or individuals the opportunity of a free advice session. Go to the BAS website and access a list of chartered accountants in your area. Contact one displaying the BAS logo to arrange a meeting and have a free, no obligation discussion on your business or personal financial issues.