30 day payment terms to become standard as business minister Matthew Hancock announces improvements to the Prompt Payment Code
Business minister Matthew Hancock has declared changes to the Prompt Payment Code (PPC) to help end the poor payment practices affecting small business suppliers.
The government backed amendments will promote 30 day payment terms as the established standard, with 60 day payment terms enforced as the maximum limit. The new changes will also empower small firms by increasing transparency as larger businesses must publish their payment terms publicly.
To date over 1,700 businesses and public authorities have signed up to the PPC, which will be managed by the new Code Compliance Board (CCB).
The board, which consists of individuals from different business representative groups, will monitor the code’s signatories and deal with any challenges made against new members – removing any found to be failing to follow the new policy changes.
The amendments are welcome news to the small and mid-sized business community as the announcement comes after a recent cross-party panel held by the Federation of Small Business (FSB) in order to confront poor payment policies that were hindering small and mid-sized firms.
During his announcement, which was made to the EEF, the minister highlighted that the changes were an important part of enabling small business growth and urged larger companies to join, stating that he had already written to FTSE 350 insisting they do so.
Chief executive at the Forum of Private Business, Phil Orford MBE, also reemphasised the importance of the PPC’s adoption:
“No small business should have to wait for an unreasonable length of time to be paid. We welcome that the government recognises that more than 60 days is unreasonable in most circumstances. It is fundamentally unfair that small businesses are being used as a line of credit for larger organisations and propping up big business, and the government’s moves to provide much needed teeth to the Prompt Payment Code are what many small business suppliers have wanted to see.
“The fact that some signatories continue to operate payment terms of as much as 120 days is yet another example of the supply chain abuse that threatens to break the backbone of the British economy – small businesses. The need for further action from policy makers to fix the broken big business ethics culture in the UK is fundamentally clear.”
The post Government to reduce late payments with introduction of major changes appeared first on My Business.