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11 July 2012 | Kamalpreet Badasha
The top 100 companies listed on the UK stock exchange are being challenged to sign up to The Institute of Credit Management's (ICM) prompt payment code (PPC) as part of the ‘Be Fair – Pay on Time’ campaign.
Signing up to the code means businesses pledge to pay their suppliers quickly, as stipulated under their original contractual terms and not alter payment times retrospectively. The campaign is led by Oldham and Saddleworth MP Debbie Abrahams, with the support of the Forum of Private Business (FPB) to highlight the negative impact of late payments on SMEs.
ICM and the Forum of Private Business have countersigned a letter that is being sent to FTSE companies. At present, only a quarter have signed up to the voluntary code.
Campaign supporters are being asked to tweet companies directly using the hashtag #payontime asking them to sign up to the code.
Campaign supporter shadow business secretary Chuka Umunna said: “Too many small companies are waiting too long for payments, and many successful firms are being put at risk of going under because they are not being paid on time by large companies, organisations and the public sector. Collectively, SMEs are owed billions of pounds in late payments.”
Late payments have also been highlighted in research from law firm EMW, which found that SMEs working with the eleven largest public sector contractors had to wait 42.1 days in 2011, compared to 40.4 days in 2010. The contractors had a combined annual turnover of £36.5 billion.
EMW principal Jodi Tierney says: “These figures show that large outsourcers are using their greater negotiating power to force their smaller suppliers and subcontractors to wait longer and longer for payment. This is completely negating the effect of the government’s prompt payment policy, which was created to help SMEs.”
In April 2011, the government introduced a policy to pay all contractors within five days. However, according to research, money is not flowing down the supply chain to SMEs through the big contractors.