Prompt Payment Code – Tackling Slow Payment in Business

Running your own business is doubtless one of the most fulfilling things you can do. You get to be boss of your own empire, make all the important decisions, and spend time creating a business that ultimately makes you happy and, if it’s going well, provides you and your family with a better quality of life. However, while there are always going to be ups in the world of running your own business, annoyingly there will always be some lows. One of the most frustrating and time-consuming of these lows has to be tackling slow payment. 

Fortunately though, when it comes to slow paying customers, there is help available – it’s called the Prompt Payment Code. 
 

What is the prompt payment code?

The Prompt Payment Code (PPC) is administered by the UK’s main organisation for credit control, the Institute of Credit Management (ICM) on behalf of the Department of Business Innovation and Skills. 

It doesn’t matter what size business you run, being paid on time is important and in a fair world, it should just be expected. When you enter a shop and buy a pair of jeans, you don’t say, ‘thanks for that, I’ll pay you in two weeks time’. You pay right there, right then. It’s standard practice. It should be the same in the world of business – if your invoice says, ‘please pay within 28 days’ then it should be paid within 28 days. Unfortunately, however, this just isn’t always the case, and this is where the Prompt Payment Code steps in.

The Prompt Payment Code exists to promote a best practice within the business world. Organisations can choose to sign up to the code and by doing so they agree to the following –

Pay suppliers within the agreed time frame. This includes not trying to change payment terms retrospectively, and not changing the practice on how long you pay small companies

You give suppliers clear guidance. This means a business needs to supply clear guidelines on payment terms and that these are easy to understand. If any complaints arise, there must be a system in place to deal with them. Furthermore, if there is a problem with paying an invoice, you commit to notifying the suppliers as soon as possible and state why you are unable to meet the payment terms specified

Promote and encourage the Prompt Payment Code. By signing up to the code you obviously understand that it’s of clear benefit to both your own business and those you are dealing with. In order for a fairer business world to exist, it’s expected that you encourage the good practice of the Prompt Payment Code by asking businesses you deal with to sign up too
 

Why sign up?

Maybe you’re in the habit of always paying your invoices on time, and if you’re in the lucky position of never having encountered late payment for your services you could be wondering what all the fuss is about. If you’ve never had to deal with late payment, you’re one of the lucky few. Furthermore, just because you’ve never had to deal with it yet, doesn’t mean you won’t in the future.

Signing up to the Prompt Payment Code sets you out as a business who means business. Once you’ve been approved you’ll be able to add the PPC logo to any documentation you send out. This means when you’re setting up relationships with new businesses they’ll be able to see you’re trustworthy – and in turn, you may benefit from more favourable rates.

In addition, a reputation for prompt payment can help your company credit status in credit agency credit reports. Credit reporting agencies obtain data from a number of sources and this can include payment records shared by suppliers. If you pay these suppliers promptly, how quickly you pay can boost your credit rating.

There’s no doubt about it, the existence of the Prompt Payment Code can only be a good thing for UK business. What’s more, with credit agency research suggesting that over 60% of the UK’s total supply chain has signed up to the Prompt Payment Code, it’s hopefully set to become the norm.

In an economic climate that has been far from smooth in recent years, signing up to this code can only inspire confidence throughout the world of business. If more and more companies decide to join, investment and growth are bound to follow.

See more credit tips and information.