An initial review of payment practices under the government’s Prompt Payment Code has found 17 signatories in breach of the code’s commitments.
A total of five companies - BHP Billiton, DHL, GKN Plc, John Sisk & Son Ltd and Twinings - have been kicked out of the scheme completely for non-compliance and for failing to produce an action plan for how they intend to bring their payment practices in line with the stipulations.
Another 12, including household names such as Vodafone, Rolls Royce, SSE and British Sugar, have been suspended pending promises to fall into line.
The Prompt Payment Code is the government’s flagship initiative for tackling late payment culture. It is administered by the Chartered Institute of Credit Management (CICM) and requires signatories to commit to settling 95% of invoices within 60 days. Although the scheme has attracted thousands of members, it remains voluntary and is backed up with no further powers of enforcement beyond the option to name non-compliant companies and remove or suspend their membership.
Out in the open
The CICM’s ability to determine whether members are sticking to the terms of the code is based on the fact that all large businesses in the UK must now publish data relating to payment practices as part of their annual accounting regime. The CICM has described these initial findings as part of ‘phase 1’ of its review of that data, stating that it expects more companies to be removed or suspended following completion of phase 2.
The high profile of the companies named and shamed in this latest exposé of late payment culture underlines just how prevalent an issue this is. This is not a problem relating to shady enterprises no one has ever heard of - these are bastions of UK PLC failing even in their own commitments to paying suppliers and contractors on time.
It also serves to underline some of the sectors of the economy where the issue of late payments is particularly acute. The fact that half of the companies suspended from the code - Balfour Beatty, Costain, KBR, Interserve Construction, Laing O’Rourke and Persimmon Homes - all operate in the construction and infrastructure sector is a further black mark against an industry still reeling from the reputational damage caused by the collapse of Carillion a year ago. Interserve is currently in administration with thousands of contractors and suppliers facing the prospect of not being paid for services completed prior to its collapse.
Image "Protect" by Flickr user "GotCredit" used in accordance with CC by 2.0.