Five companies previously suspended from the Government’s Prompt Payment Code (PPC) have been reinstated, officials have revealed.
BT, IBM, Kier Highways, Screwfix and Seddon Construct all improved payment practices and proactively engaged with compliance officers, submitting plans on how they intend to meet the code’s standards.
Signatories to the code must agree to pay 95% of all invoices within 60 days and work towards adopting 30 days as standard, to avoid smaller businesses on the supply chain suffering financially.
The current pandemic crisis is placing an extraordinary pressure on the cashflow of businesses and it is more important than ever that Code signatories honour their payment practice commitments.Philip King, interim Small Business Commissioner
Several signatories remain suspended, including GlaxoSmithKline, Diageo, Unilever and BAE Systems.
The PPC said prior to being suspended:
– BT were paying just 59% of invoices in 60 days or more, but are now paying at 94%.
– IBM were paying 55% of invoices in 60 days or more and are now paying at 90%.
– Kier Highways were paying 79% in of invoices in 60 days or more and are now paying at 98%.
– Screwfix were paying 18% of invoices in 60 days or more and are now paying at 91%.
– Seddon Construction were paying 19% of invoices in 60 days or more and are now paying at 92%.
The companies reinstated that remain below the 95% requirement have vowed to meet the target.
Interim Small Business Commissioner Philip King said: “A growing number of businesses have signed up to the code in recent months and this shows the importance companies place on being signatories to the Code.
“The current pandemic crisis is placing an extraordinary pressure on the cashflow of businesses and it is more important than ever that Code signatories honour their payment practice commitments.
“It is encouraging to see suspended signatories now adhering to the requirements of the Code and being reinstated but the companies who continue to treat their suppliers unfairly remains a concern.”
The problem of late payments has hit suppliers hard in recent years, but data suggests this has exacerbated during the coronavirus crisis.
A recent survey found the average smaller company does not have enough cash to cover debts due in the next year.
Accountancy group UHY Hacker Young said an analysis of the balance sheets of more than 13,500 SMEs (small to medium sized enterprises) shows the average firm only has 95% of cash needed to pay debts due in the next 12 months.
A spokesman for BT said the company had improved its invoice processes and said the company was “delighted to be reinstated”.
He added: “This progress is particularly timely given the pressures coronavirus is putting on cashflow across our diverse supply chain and SME suppliers.”
Andrew Davies, chief executive at Kier said: “Following the reinstatement of other Kier businesses onto the Prompt Payment Code we remain committed to working proactively and in partnership with our suppliers.”