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9 February 2012 | Angeline Albert
The government will
create a working group to investigate late payment of suppliers and is urging
small firms to pursue organisations who delay the settling of bills.
Business minister Mark
Prisk this week announced that a group of business representatives will be
called upon to examine issues behind late payment of suppliers.
Prisk said: “We have
secured the agreement of business representative bodies to come together and
establish a prompt payment workshop, to explore these issues more fully and
develop business-led solutions. We must continue to promote prompt payment to
ensure our small businesses can thrive and grow.”
The government is
encouraging SMEs to agree payment terms before delivering orders and wants all
businesses to sign-up to the government’s Prompt Payment Code, run by the
Institute for Credit Management (ICM). The code promotes best practice between
buying organisations and their suppliers. Those who sign it commit to paying
their suppliers within clearly defined terms.
Analysis by Experian
suggests that current signatories to the code represent more than 60 per cent
of the UK’s total supply chain value. Businesses can sign up to it here.
The government said it
is paying 80 per cent of its own invoices within five days. The Department for Business Innovation & Skills (BIS)
paid 93.6 per cent of invoices within five days in December last year, and
averaged 95 per cent across 2011.
BIS is recommending that
organisations make complaints about late payment by the code’s signatories and
use legislation already in place to pursue late payers. The minister also
recommended that suppliers adopt electronic invoicing.
Prompt payment is vital
for SMEs, with many firms not able to survive the cashflow problems that late
Philip King, chief
executive of the ICM said: “The only good client is a paying client, and the
difficulties of getting paid – and getting paid on time – is a challenge that
we all face, regardless of the industry or sectors we serve.”