As a debt recovery company tasked with chasing down overdue payments, it makes sense for us to be a signatory of the Prompt Payment Code, the voluntary code of conduct for all businesses when it comes to paying suppliers.
We recently signed up to the PPC and, as part of the process, were asked to provide the names and contact details of 'referees' - satisfied former suppliers who could vouch for us as regular prompt payers - and these were, in turn, contacted by the Chartered Institute of Credit Management, who act as administrators of the PPC.
Acting as a referee is not difficult, but the CICM asks referees to fill in a short survey, basically asking about the nature of the supplier's relationship with us, if we regularly pay on time, and how long, on average, it takes us to settle our invoices.
That's where one referee had a problem - because the lowest number of days you can specify in the 'days taken to pay' question is 1, and we have always paid him faster than that.
In fact, this particular supplier has worked with us for several years on a payment upfront basis - we pay, then the work is done, then the invoice is sent over retrospectively.
We're proud of our commitment to paying not just promptly, but even before the work is done where it is appropriate to do so (and where it helps to support our smaller suppliers whose cash flow is particularly vulnerable).
About the Prompt Payment Code
Signing up to the Prompt Payment Code is our pledge to treat all suppliers fairly when it comes to time for us to pay our invoices.
It involves a commitment to three broad areas, with several specific promises made in each area:
1.Pay suppliers on time
In accordance with agreed terms
Without retrospectively changing payment terms
Without treating smaller suppliers unreasonably
2.Give suppliers clear guidance
Including clear guidance on payment procedures
With a system to deal with suppliers' complaints
With prompt notification if an invoice will not be paid within agreed terms
3.Encourage good practice
- By asking lead suppliers to adopt the Code too
The three tiers of the Code each serve a slightly different purpose: at its best, the first section of the pledge calls for all suppliers to be treated fairly and equally, payment terms agreed upfront to be honoured later, and all payments to be made on time, all of which should be (but sadly isn't always) a basic expectation.
In the second area of the Code, the commitment is to information rather than action - making sure suppliers know your payment terms and procedures, what to do if they want to raise a dispute, and simply the courtesy of letting them know if you're going to fail to pay on time (again, hardly an excessive expectation).
Finally, signatories of the PPC are asked to encourage others to follow suit - and in the UK's current and much maligned 'late payment culture', it is good to see the efforts of others have a knock-on effect throughout supply chains, encouraging all firms to pay promptly and in full, and to take appropriate action when they are unable to do so.
We would encourage every business, irrespective of size, to join us in signalling their commitment to prompt payment by signing up to the code and displaying the banner proudly.