FPB speaks out against abuse of Prompt Payment Code

The Forum of Private Business is urging changes to the Prompt Payment Code after it has learned firms with payment times as long as 90 days are planning to sign up.

The organisation, which has been campaigning strongly against late payment by big business, has spoken out against Unilever looking to sign the PPC despite its lengthy 90-day payment times for suppliers.

Unilever increased supplier payment times in 2010, from 60 days to 90 days, in the months between the UK’s double-dip recession.

More recently, October saw Sainsbury’s increase non-food supplier payment times from 30 to 75 days, but only last month the supermarket giant indicated it will also seek to sign the PPC.

The Forum says this type of behaviour is clearly undermining the spirit of the PPC, even if it was not technically breaching the current eligibility requirements allowing firms to join.

FPB chief executive Phil Orford argues that the rules must be firmed up to prevent this type of abuse.

He says, ‘We feel big businesses are cynically using the Prompt Payment Code to boast of their ethical credentials to the wider public, when in fact they are anything but to their suppliers.

“No one in their right mind can think Unilever’s 90-day payment terms are ‘prompt’, so why should they be allowed to sign the Prompt Payment Code. It’s a ridiculous situation which has to stop.

Orford adds that companies such as Unilever and Sainsbury’s are ‘hoodwinking the public for their own PR purposes’ by signing, while the small firms who supply them see no change to cripplingly long payment times.

The Forum says it is speaking out ahead of business minister Michael Fallon’s naming and shaming exercise later this month, which will see FTSE 350 listed companies who have refused to sign the PPC exposed by the minister.

Orford adds, ‘There’s absolutely no doubt that we are going to hear of a number of big name brands agreeing to sign the Code ahead of Mr Fallon’s announcement, but if these firms aren’t prepared to decrease their payment terms then quite frankly what’s the point in them signing? It would be a meaningless, self-serving gesture, and we hope the public can see this.’

The FPB suggests that payment on or by the end of the month following the month of invoice, is more than ample time to settle up.

The group’s own research last year showed most local councils are paying in under 30 days, with many in under ten days.

‘If notoriously inefficient local governments can cough up this fast, we see no reason why big business can’t,’ Orford continues. ‘Certainly, those that have painfully slow payment times should not be eligible to sign the PPC.’

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

Related Topics

Prompt Payment Code

Leave a comment