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Top 100 FTSE companies shun Prompt Payment Code

10 October 2012

A campaign inviting the 75 top 100 FTSE companies who weren't already signed up to the Prompt Payment Code (PPC) resulted in only ten doing so. The code encourages private and public sector organisations to pay on time.

The Be Fair- Pay on Time campaign is fronted and co-signed by Debbie Abrahams, MP for Oldham East and Saddleworth; the Institute of Credit Management (ICM); the Federation of Small Businesses (FSB) and the Forum of Private Business (FPB).

Letters were sent out to invite the 75 FTSE companies on the 6th July with a 31st August deadline for response. Out of the companies to receive a letter four said they would not sign the code, sixty did not respond and one sent a holding letter that was never followed up.

National Chairman of the FSB, John Walker, said: "It is good news that ten of the biggest companies in the UK have signed up to the campaign. We now need to see more following their example.

He continued: "Too many businesses struggle with their cash-flow because of late payments and it's time to stop this. It just isn't fair that small firms struggle because bigger businesses take too long to pay."

Those that did sign up were BG, BHP, Reckitt Benckiser, Royal Dutch Shell, Serco, Standard Life, Vodafone, Land Securities, Severn Trent and Tullow.

Companies signing up to the code commit to: paying suppliers within agreed terms, ensuring their suppliers know to invoice them and to encourage good practice.

A survey conducted by Graydon earlier this year found that late payment is a major problem for around 266,000 businesses. A further 328,000 indicated that it was a minor problem. Over half (59 per cent) had to in turn pay their suppliers late due to lack of reserves within the business and being paid late themselves.

Of those surveyed 75 per cent believed the benefits of prompt payment outweighed those of late payment. The most popular reasons were that it created long lasting relations ships and it was how they expected to be treated.

Effective ways to minimise late payments, top survey answers:

  • Regular/continuous calling
  • Put clients on stop/withhold future services and supplies
  • Relationship building
  • Good credit control team/process
  • Clear terms and conditions/create schedule for payment

To read the full survey results click here.

This entry was written by Ranjna, posted on 10 October 2012 Bookmark the permalink. Follow any comments here with the RSS feed for this post. You can post a comment.

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