Friday, 18th January, 2019
The government initiative to encourage larger businesses to pay suppliers quickly and on time was first introduced in 2012. Since then, the voluntary Prompt Payment Code has been adopted by a large number of businesses which agree to pay suppliers within 60 days.
A proposal to make the code mandatory for large UK businesses is now gathering support. In a survey of 100 MPs published last week, three-quarters backed the idea, along with recommendations to introduce fines for late payers and reduce the maximum payment terms to 30-days. Research into small business payment practices show shorter average payment times.
A survey of 1,000 small business owners (fewer than 50 employees) found that it takes those in the retail, catering and leisure sector an average of 10 days to pay suppliers: half (50%) pay suppliers immediately, while 41% pay within 30 days, and 7% take between 31 and 60 days to pay.
The research revealed that a quarter of small business owners in those sectors have themselves experienced late payment. The knock-on effect has meant 37% have not been able to replenish stock, 14% have been unable to pay their own suppliers and 13% have fallen behind on payments to landlords and staff.