ACTION ON companies who fail to meet the standard of the Prompt Payment Code (PPC) has seen 17 companies removed or suspended from the Code during the past quarter, according to the Chartered Institute of Credit Management (CICM).
Companies who sign up to the Code, administered by CICM on behalf of the Government, pledge to uphold its payment standards in order to help end the culture of late payment, particularly for small businesses. This includes a commitment to pay 95% of all supplier invoices within 60 days.
Based on the new Payment Practices Reporting data that large businesses must publicly report, CICM is reviewing whether businesses are meeting the standards of the Code and paying their suppliers promptly. The first phase of these reviews identified 17 businesses to be removed or suspended, with more removals and suspensions expected in the second phase of review currently underway.
Five companies have been removed from the Code, they are:
- BHP Billiton – a global resources business
- DHL – a global logistics business
- GKN Plc – a multinational aerospace and automotive components business
- John Sisk & Son Limited – an international construction company
- Twining and Company Limited – a purchaser and seller of tea, coffee and other beverages
Twelve businesses have been suspended from the PPC, for not paying their suppliers in line with the Code, they are:
- Atos IT Services UK&I – an IT services business and main UK subsidiary of Atos SE
- Balfour Beatty Plc – an international infrastructure group
- British Sugar UK – a British producer of sugar for the UK food market
- Costain Limited – a construction and engineering company
- Engie Services Limited – a facilities management services company, part of Engie Group
- Interserve Construction – a construction company owned by Interserve Group Limited
- Kellogg Brown & Root Limited – a facilities management and construction engineering company, part of KBR Inc.
- Laing O’Rourke – an international engineering business
- Persimmon Homes Limited – a UK house building company
- Rolls-Royce Plc – an engineering business focused on power and propulsion systems
- SSE – electrical and telecoms provider
- Vodafone Limited – a telecoms company, part of the multinational Vodafone Group Limited
All 12 of the suspended businesses have committed to make changes to meet the standards of the Code and pay suppliers promptly in future.
CICM’s Chief Executive, Philip King, said: “The Board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.
“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant.”
Small Business Commissioner, Paul Uppal, added: “It is essential the code has credibility and demonstrates a commitment to ensure small businesses are treated fairly.
“My team has already recovered more than £3.5 million in late payments and is ready and available to support small businesses experiencing poor payment practices.”
Government contract bidding
News of the suspensions builds on a government announcement made in November, where failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts.
From September 1st, 2019, any supplier who bids for a government contract above £5 million per annum will be required to answer questions about their payment practices and performance. The expected standard is to pay 95% of invoices in 60 days across all their business.
Any supplier who is unable to demonstrate that they have systems in place that are effective and ensure a fair and responsible approach to payment of their supply chain may be excluded from bidding.
In October the Business Secretary, Greg Clark announced that further reforms to the Prompt Payment Code were being considered, including whether the Small Business Commissioner should have a greater role in its administration as part of his wider role in tackling late payment.