The code, which was drawn up by the Institute of Credit Management, has been in operation for four years. Its signatories commit to paying suppliers within the agreed time and ensuring that there is a proper process in place to resolve any issues that may arise.
A total of 1,182 companies have signed up to it and between them they account for 60% of the UK supply chain.
However, only 27 FTSE 100 companies and five FTSE 250 companies are signatories.
The Business Enterprise Minister, Michael Fallon, said: “Late payment causes real cash flow problems for entrepreneurs. It stops them from growing their business – we need to change the culture.
“Too many of our biggest companies are ignoring the Prompt Payment Code. My message to them is clear – make prompt payment a p
riority or face the consequences of being named. I’m confident that driving up support for the common sense principles in the Code will have a very positive effect.”
The Government is also urging businesses to take legal action where necessary to ensure payment. A statement says: “Raise complaints through legal channels over late payment from Prompt Payment Code signatories and use legislation already in place to help companies pursue late payers and seek the relevant compensation available.”
Businesses facing problems with late payments should seek legal advice as soon as possible. A letter from a solicitor is often enough to secure settlement. There are also several other legal measures that can be taken to ensure prompt payment.
Please contact us if you would like more information about the issues raised in this article or any aspect of debt collection and credit control.