The Prompt Payment Code has been updated and extended by BEIS.
The most important and significant change will be an additional requirement to pay 95% of invoices, raised by 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 to companies of all sizes.
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.
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.
Additional reforms include:
- 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.
- With immediate effect, the code administrators will be able to investigate payment performance based on third party complaints.
- A new 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.
- New applications to join the code will also now have to be signed off by either the CEO or CFO, or in the case of smaller companies the owner.
- 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 PPC currently has over 2,800 signatories, who are required to pay 95% of their invoices within 60 days or else be publicly struck off the Code until substantial changes to their payment practices have been made.
When a company is struck off the Code for poor practice, this is publicly announced by the Small Business Commissioner’s Office. A record of signatories and struck-off companies is maintained on the Prompt Payment Code and SBC websites.
Post expires at 4:09pm on Monday July 19th, 2021