11 December 2008 | Jake Kanter
The government has launched a code of conduct urging large firms to pay suppliers on time.
The "Prompt Payment Code", announced by the prime minister during questions at Westminster yesterday, called on businesses to stick to the terms of a contract and not to alter billing periods.
"I believe that some of our mainstream large businesses should be in a position to help smaller businesses," Gordon Brown told MPs.
Companies will be asked to provide suppliers with guidance on their billing procedures and ensure that vendors can dispute late payments. The code says businesses should give suppliers sufficient notice if payment is delayed and encourage good practice to be adopted further down the supply chain.
The proposals have been developed with the Institute of Credit Management, and representatives from companies including Asda, John Lewis and British Gas agreed to adopt the code at a payment summit organised by the government yesterday.
Lord Mandelson, business secretary, wants the code to be adopted by all UK firms and will hold another meeting in January to track the scheme's progress.
"This will be essential to help smaller firms maintain cash flow in the months ahead," he said in a statement.