Late payment continues to be a major issue for businesses, particularly for small and medium sized enterprises. It can lead to a drop in profits, and cause cash flow problems which in turn can affect your ability to pay your suppliers and employees. If you are a late payer yourself this could affect you too, as you are less likely to receive favorable pricing, service and conditions than a prompt payer.
Late payment also impacts on the running of your business as you can spend a significant amount of time chasing up payment, which is time better spent running your business.
Prompt Payment Code
In an effort to tackle the issue of late payment the Prompt Payment Code (PPC) has been introduced. The PPC is administered by the Chartered Institute of Credit Management on behalf of the Department for Business, Energy and Industrial Strategy (BEIS).
Signatories to the PPC undertake to:-
- Pay suppliers on time, within the contract terms agreed. Paying within 60 days is a requirement unless the payer can show “exceptional” circumstances.
- Give clear guidance to suppliers, in relation to payment procedures, dealing with complaints/disputes, and advising the supplier promptly if an invoice will not be paid in the agreed time.
- Encourage good practice, by requesting that lead suppliers encourage adoption of the PPC throughout their supply chain.
Compliance with the principles of the Code is monitored and enforced by the PPC Compliance Board who can investigate and, if necessary, act in the case of non-compliance.
At the time of writing there are 2212 signatories to the PPC, and signatories can be identified as they are entitled to display the PPC logo on their documentation and website. There are plans to introduce a Supply Chain Payment Charter in the construction industry by 2025, which will aim for a standard 30-day payment term, and that retentions are no longer withheld.
Despite the introduction of the PPC and late payment of commercial debts legislation, which imposes enhanced interest and compensation for late payment, it is in all-too-common occurrence that suppliers are not paid on time (or at all) and need help to recover monies due to them.
There are ways in which you can seek to recover payment due, together with late payment interest, including negotiation, mediation (or other forms of alternative dispute resolution such as adjudication, arbitration) or, as a last resort, court proceedings. If the debtor is insolvent and cannot pay its debts you can also instigate the winding up of the debtor company.
We are experienced in all methods of debt recovery procedures, so if you would to discuss your options contact Paul Hayhurst on 01302 965252 or by email at firstname.lastname@example.org