In a bid to create a culture of better payment practice, the Chartered Institute of Credit Managers (CICM) has confirmed a number of new measures to be included as part of its Prompt Payment Code (PPC).
The PPC sets standards for payment practices and best practice and is administered by the CICM on behalf of the Department for Business, Energy and Industrial Strategy. Compliance with the principals of the code is monitored and enforced by a compliance board and companies that have been approved can use the PPC logo on their documentation and websites.[/intro]
Good payment practice
Being a PPC signatory demonstrates to potential suppliers that a company is serious about good payment practice – and this should be a welcome signal to credit managers.
Recently, minister for small business, Margot James, and CICM chief executive Philip King wrote a letter to PPC signatories, highlighting the success of the code to date, as well as its challenges. It explained that those who meet the standard “hugely successful in achieving fast settlement of invoices, creating a dialogue between parties, improving contract terms and providing constructive assistance welcomed by suppliers and signatories alike.
The letter also confirmed the future appointment of a small business commissioner. This individual will provide help and advice to businesses on topics such s how to achieve prompt payments.
Signatories of the PPC are expected to be paying their invoices within 30 days where possible and that this should be the norm. While the code’s compliance board does not enforce the 30-day terms, it states that paying invoices within 60 days will be a requirement unless there are exceptional circumstances.
Boost cash flow
Commenting on the PPC’s latest announcement, Ms James explained something we imagine credit managers across the UK will be nodding in agreement with.
She noted the importance of prompt payment and how it can boost cash flow and allow businesses to invest in growth for the future.
“We need a culture change to stamp this out and the Prompt Payment Code continues to play an important role in bringing this about, alongside a package of measures taken forward by government and industry,” she said.
Currently, the PPC has more than 1,800 signatories. Each one has committed to best practice in the fair and equal treatment of suppliers, many of which are small businesses. “The businesses signed up to the Code commit to demonstrating the gold standard of payment practices and it’s great to see so many of Britain’s leading household names on the list,” Ms James added.
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