Prompt Payment On-Time every time - Don't Think So Sorry!

https://www.promptpaymentcode.org.uk/

With the Government tightening the Prompt Payment Code, which 3000 big Companies have voluntarily signed up to down to 30 days from the previous 60 days will it really help the SME end of the commercial B2B arena?

Well it certainly has its plus points, you can see if a business has signed up as part of your due diligence and with the addition of personal pledges from Chief Executive Officers and Finance Directors adding a layer of additional security, coupled with the 95% threshold that a business must maintain to remain on the Directory meaning that if they wish to maintain their reputation they must comply, then there is a good foundation. Nor can you ignore that this is voluntary sign up (unless you are bidding for a Government contract over ￡5million per year not really sure how many of those are around)

For myself, though whilst I can see this helping the higher end of the SME market who will have been in a position to either tender or service a long term contract with a big company, or may have one-off small value orders, however, if we are to define big Company as out of the SME turnover bracket which the EU defined as below then it would be logical to assume that a large chunk of SME turnover is directly between the varying levels of SMEs themselves.

Micro Business = less than 10 employees & turnover under ￡2 million. Small Business = less than 50 employees & turnover under ￡10 million. Medium Business = Less than 250 employees & turnover under ￡50 million.

It is a known fact that late payment has been an issue for SMEs, contributing to reducing cash flow to a trickle as opposed to a flow or even worse total starvation and subsequent insolvency.

I cannot help but wonder that if Credit Management was given its rightful place in the SMEs essential toolbox then the problem would lessen and business owners would be better placed to grow their business with a better understanding of Credit, Credit Control, Due Diligence, Credit Management and should all that fail Debt Recovery.

Perhaps it is just me who thinks this way but somehow I doubt it.