FAQs
 
 
Prompt Payment Code Q&A

Is there any further update about the Statutory Duty to Report?

An updated timetable has been issued to all Prompt Payment Code signatories, and can be read here.

What is an 'exceptional circumstance'?

Please click here to read a letter from the Minister for Small Business, Consumers and Corporate Responsibility and the Chief Executive of the Chartered Institute of Credit Management which clarifies the issue of 'exceptional circumstances'. If you require further information, please contact us.

How are you strengthening the Code?

The Code itself is an industry-led initiative. We, along with the Chartered Institute of Credit Management have brought together an Advisory Board made up of signatories to discuss how the Code can be strengthened.
We are strengthening the Code by:
  • introducing a 60 day maximum payment term, and enshrining a 30 day payment term as a norm for all signatories as standard practice;
  • creating a Code Compliance board to enforce the Code, including its maximum payment term;
  • requiring small and medium sized signatories to report annually on their payment performance, on a comply of explain basis, and for large signatories to report on their payment practice and performance in line with the new statutory reporting requirement;
  • increasing the number of references needed to validate membership; and
  • promoting and strengthening the Prompt Payment Code website.
The Advisory Board have endorsed these changes to the Code.

Will these changes cause some Code signatories to leave?

These changes may result in some current signatories of the Code, those who cannot meet the higher standards set, leaving it. We only want best payers to be signatories to the Code. The key is to make the Code a recognised and demonstrable beacon of best practice for members of the Code. Good companies treat their supplier fairly to develop a strong and healthy supply chain, and they will want to be a signatory to the Code.

Are your ideas endorsed by the Business Representative bodies?

The Advisory Board is made up of a mixture of large companies, SMEs, public authorities and business representative bodies. All members of the Advisory Board have endorsed the proposals to strengthen the Code.

When will the 60 day payment term be introduced?

We will write to signatories in the coming weeks to actively encourage them to start complying with the strengthened Code, with the formal requirement coming into force next year. Click here to read more.

What is going to happen in the meantime?

Reforms to the Code such as improving the website will be made within the coming months. Signatories can continue to be challenged if a supplier believes they have been treated in a manner which contravenes the Code.

How will these measures strengthen the code?

These measures will set new expectations on signatories to treat their suppliers fairly and make payments in a reasonable amount of time. Shining a light on payment practices improves transparency and will help us to tackle the culture of late payment in the UK. We are also seeking to improve the Prompt Payment Code website as an educational tool; so that it provides guidance on how suppliers can get paid promptly.

Was there really support for this?

The proposals to strengthen the Code were made with the help of evidence from our Prompt Payment Code Survey, which ran early 2015. For instance, 72% of signatories who responded supported the introduction of a maximum payment term, and 63% thought this should be 60 days.

What were the survey’s key findings?

These were:
  • 72% of signatories who responded supported the introduction of a maximum payment term, and 63% thought this should be 60 days.
  • That 70% of all participants felt that members should provide report on their payment practices.
  • That 57% of all respondents believed that strengthening the enforcement proposals were workable.

Results of the survey findings are here.

How will this be monitored/enforced?

We have established a new Code Compliance Board to consider and respond to complaints by Code signatories. The Board can sanction signatories; including if need be expelling them from the Code. When the Government’s Duty to Report requirement commences in April 2017, the Board will be able to proactively challenge a signatory on their payment practices and policies.

Paying over 60 days can be easily explained away. This isn’t strong enough.

The 60 day payment term is a positive step in addressing the issue of late payment. The Code takes this one step further and sets a thirty day term for companies to comply with standard practice.

Who will sit on the compliance board?

The Compliance Board will consist of at least five core members. We expect three of the members will be drawn from trade representative bodies, who would judge cases as individuals, rather than representative of their respective organisations. The other two members will be corporate Code signatories which will include a public body. Click here for further information.

How will the decisions of the compliance board be announced/made publicly available?

The Code Compliance Board will make enforcement decisions on behalf of the Code. The Board will issue a public statement if a signatory is removed from the Code, and a list of removed signatories will be available on the Code website

What is the difference between the 60 and 30 day payment term being introduced?

The Code has set 30 days as a target which all signatories should work towards. The upper limit of the Code is that signatories will have to pay 95% of their undisputed invoices within 60 days, or explain that non-payment was due to exceptional circumstances. If the Compliance Boards finds that neither finds that neither of these conditions was met then the signatories were not compliant with the Code. The Advisory Board also considered that 30 day payment terms are best practice, and will advocate this as a standard for all signatories to aspire to.

What are exceptional circumstances?

The Code Compliance Board will have the scope to define exceptional circumstances when a challenge is made on a signatory.

How will signatories need to report?

SME signatories to the Prompt Payment Code will report on their payment performance on an annual basis, on a comply or explain basis. Large companies will be required to report on their payment practices and performance in line with the new statutory reporting requirement which is currently going through Parliament in the Small Business, Employment and Enterprise Bill and there will be links from the Prompt Payment Code entry to the Reporting Portal for large companies.

Will this be a burden to SMEs for reporting purposes?

The Board discussed the burden on SMEs for reporting purposes and decided that annual reporting would be a meaningful way to report on their payment practices without being too burdensome.

What are you going to do to promote the PPC further?

The CICM will be launching a revamped website for the PPC, which will include more detailed information on what constitutes best practice. They will also more proactively announce new signatories as well as name and shame signatories who have to be removed from the code for non-compliance.

How do I provide additional referees?

Please email your referee information to promptpaymentcode@cicm.com or respond to the email that the Prompt Payment Code will send to you over the next few months.

What were the results of the survey?

Click here.
 
 
 

How do we know that others are as good as us?

Every organisation has to go through the same application process and all Approved Signatories are reviewed every 6 months by asking their referees to confirm they are still paying promptly. This will ensure the signatory list has integrity and can be relied upon as a genuine indication of good practice.

How will we know we have been accepted?

Once we have received positive references, you will receive an email confirming your successful application together with the Prompt Payment Code logo. If there is a problem with your references, we will contact you.

Can I challenge the status of a signatory of the Prompt Payment Code?

Yes, suppliers can use the 'Challenge’ section of the website to challenge the status of a signatory. The challenge will be investigated by the CICM and contact made with the signatory who is encouraged to enter a dialogue with the supplier. If it might be helpful, the CICM is happy to speak to both parties and support their efforts. Where appropriate, the matter is referred to the Code Compliance Board which will determine what action might be required by the signatory or whether its status as a signatory should be removed.

Can an organisation based outside of the UK become a signatory?

Yes, if it trades in the UK or with UK suppliers.

Is there a policy document?

No. All the information you require is clearly shown on the website.

What do I do if my industry sector isn't showing on the Apply page?

Please contact the administrators of the Prompt Payment Code who will give advice.
 
 
 
The Chartered Institute of Credit Management (CICM) is the largest professional credit management organisation in Europe. It represents the credit profession across trade, consumer and export credit, as well as in related activities such as collections, credit reporting, credit insurance and insolvency. Visit www.cicm.com for more cashflow and credit management advice.   twitter #promptpayment
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