Following a consultation in 2020 on refroming the Prompt Payment Code (the Code), analysis is now complete and the following changes will be made to the Code.
The most important and significant change will be an additional requirement to pay 95% of invoices from businesses with fewer than 50 employees within 30 days. There will be no change to the previous requirement to pay 95% of all invoices within 60 days. This strengthening of the Code will support the smallest businesses to get paid swiftly and show the commitment of signatories to help maintain the cashflow of their smallest suppliers.
Signatories will need to identify businesses with fewer than 50 employees at the on-boarding stage, and through encouraging such businesses to declare their employee numbers on invoices.
The majority of survey responses said that it would take between 3 and 6 months to get systems in place and identify small suppliers in the supply chain. So, for existing signatories a transitional period until 1 July, will be allowed to achieve compliance with the new requirement. All other reforms come into immediate effect.
The additional reforms to the Code’s administration and how compliance is monitored are as follows:
- The Chief Executive or Finance Director or, in the case of smaller businesses, the company owner, should sign or submit the application to join the Code.
- A logo will be provided to existing and new signatories of the Code in a variety of formats, with clear guidelines about how and where it can be used.
- The Code requirements are restricted to UK invoices, and inter-company transactions are out-of-scope.
- Compliance will be measured using the Payment Practices Reporting (PPR) data, where appropriate. For signatories outside the scope of PPR, an annual declaration that the business has met, is meeting, and will continue to meet the Code requirements will be required. This declaration must come from the Chief Executive or Finance Director or, in the case of smaller businesses, the company owner.
- The Code administrators will approach signatories to discuss supplier concerns received directly from a supplier, from a third party, or from intelligence received.
The new code requirements are available online at www.smallbusinesscommissioner.gov.uk/ppc