Prompt Payment Code launched to support SMEs

The government is urging large UK suppliers to sign a Prompt Payment Code to help speed up payments made to SMEs.

Announced today by business secretary Lord Mandelson, representatives from some of the UK’s tops companies came together to establish a clear policy concerning the payment of business-to-business bills.

The code focuses on three main areas: a commitment to pay suppliers on time; giving clear guidance to suppliers; and encouraging good practice.

Mandelson said: “I am very pleased we have been able to reach agreement on the code today. The code focuses on ensuring firms pay their suppliers on time and do not attempt to change their payment terms retrospectively. This will be essential to help smaller firms maintain cashflow in the months ahead.

“I want the maximum number of businesses to sign up to it and I will be convening another meeting in a month's time to track progress.”

Companies that attended the summit included John Lewis Partnership, British Gas and Asda.

The Institute of Credit Management will host the code on its web site, providing a facility to raise concerns over late payments.

Philip King, director general of the ICM said: “Cashflow keeps business in business, and the Prompt Payment Code we are launching today with BERR will help to bring businesses certainty in this increasingly difficult climate.

“We are delighted to be hosting this initiative on our web site, which builds on our 'treating suppliers fairly' guide, part of the 'managing cashflow' series we recently produced with BERR.”

The summit follows a commitment by the government to pay its suppliers within 10 days.