Open for business

It’s launched. It’s open for applications. It is the Code that all businesses will be aspiring to be part of.

The Fair Payment Code is live. RIP the Prompt Payment Code.

The PPC was launched in 2008 and has served us well for these years. However, we realised that many firms had signed up to the PPC so long ago no one in the business knew that, no one ‘owned’ it and it wasn’t embedded as a payment culture across their organisation. Another problem is that we, as administrators, had no way of knowing whether signatories were complying with the terms unless we had complaints that indicated a possible breach and could therefore investigate.

All that’s changed with the FPC. We’ve had hundreds of expressions of interest from firms keen to apply. When they do read the guidelines and apply, we will be checking their evidence and awarding them Gold, Silver or Bronze depending on how quickly they pay supplier invoices. We will give the awards for 2 years only and then firms will have to reapply if they want to continue to be part of the Code. That way we have an automatic way of checking evidence and compliance every two years. On saying that we will also be working with firms that want to apply and aren’t quite ready to achieve an award. We’ll get you onto the Code or help you to get into a higher award level. Over the two years we’ll work with you to help to achieve you next level next time you apply. The FPC is about continually working to improve payment performance. It’s about changing the payment ‘culture’ in the UK. There is a set of behaviours to sign up to making sure that firms think about paying fairly as well as quickly: making sure contracts are clear and understandable and everyone knows what the payment terms are and when the money will arrive. We want customers to avoid disputes with their suppliers and to resolve any disputes quickly if they do arise.

The Government has vowed to stamp out late payments between businesses calling them a scourge. However ‘late’ as in overdue is only part of the story. Extended payment terms in contracts are a huge issue too. We need bigger customers to understand why smaller suppliers need to be paid quicker and to take on board the consequences, not only to those smaller suppliers, but to themselves, of undermining the sustainability and resilience of suppliers and supply chains. If your suppliers go bust because you haven’t paid them by the due date or have made them agree to accept payment 60/90/120 days after delivery of products or services then you will have the expense, delays etc that go with finding a replacement. On top of that investors and prospective customers and suppliers may well be suspicious that you’re heading into financially choppy waters and trying to conserve cash.

Nurture the supply chain and get your award from the Fair Payment Code. Use the logo to let suppliers know you’re a good payer. Keep on improving your payment performance with our help. Every part of the supply chain will be more resilient as a result. Investors will beat a path to your door. Talented people will want to work with you because you’re a firm that’s doing the right thing. You’ll get the loyalty created by building a solid relationship with the best suppliers. #EveryoneBenefits.