Type to search

Late payment problem the public sector’s war intensifies as big hitters of British business are named and shamed

Featured Supply Chain

Late payment problem the public sector’s war intensifies as big hitters of British business are named and shamed

Gavin Nicholls

Crack down on the late payment problem the public sector’s war intensified as big hitters of British business were named and shamed in a crack down on the problem.

Rolls-Royce, Vodafone and BHP Billiton are among the FTSE 100 companies removed from the Prompt Payment Code, which firms sign as part of a pledge to pay 95 per cent of supplier invoices within 60 days.

A handful of major construction firms were also removed from the scheme, with Balfour Beatty, Interserve, Laing O’Rourke and Persimmon also listed among the culprits. Several of those named and shamed, including the construction firms have already said they will make changes to meet the code’s standards, but they will not face direct punishment.

Late last year Cabinet Office (CO) minister Oliver Dowden announced serial slackers on supplier payments would be forced to “clean up their act” or face being prevented from winning new contracts from September.
Kelly Tolhurst, minister for small business said: “The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain.”
Rolls-Royce has said it is “disappointing” that the engineering giant has been suspended from a government code after it failed to pay at least 95 per cent of its supplier invoices within 60 days.
The Derby-headquartered company said that recent changes made to the assessment criteria for the Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM), resulted in its suspension.
Rolls Royce say they make well over 500,000 payments to suppliers every year and adopt a flexible approach which matches payment terms to the requirements and capabilities of our suppliers. We differentiate between our smaller suppliers, whose interests the code champions, and our larger suppliers, applying appropriate and jointly agreed payment terms to each.
“However, the significant volume of invoices we receive from our large suppliers – and the removal of the consideration of our preferential treatment for smaller suppliers – has pushed us below the compliance criteria as it is now being assessed.”
If a company bidding for a contract has not paid 95 per cent of invoices within 60 days for two consecutive six-month periods and can neither explain why nor show that they are putting it right, they may be excluded from the process.In the past, large contractors have dragged their feet when paying smaller suppliers, causing cash flow problems and leaving small businesses hesitant to take on work.
Last year it emerged collapsed outsourcer Carillion had owed around £2bn to 30,000 suppliers, subcontractors and other short-term creditors when it failed in January 2018.
Paul Christensen, CEO and co-founder of Previse, said: “We are seeing the limits of moral pressure alone when it comes to the slow payments issue. Just this week several firms have been suspended or removed from the code and this research shows that other firms may be underreporting.

Tags:

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.