Businesses have backed the Prompt Payment Code (PPC) to support SMEs who are dealing with late payments.
The PPC sets the standards for best practice for businesses and suppliers chasing overdue payments and invoices, ensuring everyone is paid on time and offered clear guidance on procedures.
Suppliers to the government have willingly committed to pay 95% of invoices within 60 days and are working towards making 30 days the standard for making payments.
It is estimated SMEs are collectively owed more than £26 billion in overdue payments.
Philip King, chief executive of the Chartered Institute of Credit Managers, said:
“The PPC allows suppliers to raise a challenge if they feel they are not being treated fairly by a signatory, and such challenges are proving successful – not only in delivering payment, but also in further improving practices and processes.
“It’s vital businesses feel confident and have certainty they will be paid on time, as well as having a route to challenge if they need to.”
Handling late payments
If a business has unpaid invoices, it may not be able to pay its suppliers on time.
Several actions can help reduce the impact caused by late payments. Some of these include:
- ensuring all transactions are under a contract which sets out payments and penalties
- charging interest on late payments
- use of up-front payments or taking down payments
- discounts for prompt payments.
Talk to us about managing your cashflow. Contact Andy Oakes.