Last week Philip King and Margot James, the Minister for Small Business, Consumers and Corporate Responsibility, wrote a letter to all signatories of the Prompt Payment Code.
In summary the letter:
- Thanked the Prompt Payment Code signatories for their continued “support”.
- Pointed out that 25% of Prompt Payment Code signatories, for the benefit of suppliers, do in fact provide information on requirements needed to ensure payment is made on time (in fact this is pretty good although it’s still voluntary and needs to be as close to 100% as possible). It’s this kind of information that will ultimately make the difference to suppliers. An example can be seen here.
- Reminded signatories that 30 days should be considered the norm for paying invoices but that this would not be enforced and that 60 days was just about acceptable. Anything beyond 60 days would require exceptional circumstances but that these remain undefined.
- Reminded signatories about the requirement
to “mark their own homework”of their duty to report on late payment as of 6th April 2017 (only a year after it was originally due to launch)
- Reminded signatories that the government will, one day, appoint a Small Business Commissioner to help out with stuff.
So in short, the PPC is still taking a pretty softly softly approach to the matter.
In his supporting blog post Philip King pointed out that the PPC had handled challenges raised in respect of outstanding invoices “worth nearly £2m[!]” and that the “vast majority” of these cases had been resolved more quickly on account of the PPC’s intervention.
We applaud these efforts but we are a little hesitant about the scale of the achievement. £2m (over two years = £1m pa) out of a total outstanding debt of >£40bn = only c. 0.05% of the problem.
Once again, context tells a different story.
Mr King went on to say that following PPC intervention in some of these cases, resultant insight demonstrated that the causes of the late payment were quite often pretty benign issues such as:
- The invoice approver being away from his / her desk during the time when the invoice was presented.
- Inefficiencies in the buyer’s invoice processing system
- Lack of chasing on part of the supplier
- (There are many more explanations, see here)
When presented at a more senior level following representation by the PPC invoices have been paid quickly. This is perhaps a little disingenuous, any buyer who has the Prompt Payment Code come knocking isn’t likely to dig their heels in unless they have a very good reason.
However this demonstrates something that we at The Prompt Payment Directory have always advocated, i.e. that late payment is not always about intentionally poor corporate responsibility (although we accept that this does exist).
It’s exactly this kind of contextual information that The Prompt Payment Directory brings to the surface for the befit of both suppliers and buyers.
Voice of the supplier.
Finally Mr King points out in his post that experience suggests suppliers who raise the issue about late payment by customers do not necessarily risk alienating those customers. The truth is only the suppliers know the reality but at The prompt Payment Directory we don’t think it should be an issue, regardless.
Using The Prompt Payment Directory suppliers can anonymously rate customers on a 1-5 scale according to the nature of the relationship and the payment process. In circumstances where payment was late, explanations can be given.
Crucially, buyers that make a concerted effort to pay their suppliers on time can also encourage them to leave (positive ratings) on The Prompt Payment Directory and of course, assuming that they do indeed pay on time, a positive profile will quickly be established.
This offers the perfect antidote to the perception that buyers, and in particular larger organisations, will find ways of massaging the output required in their forthcoming duty to report on their late payment practices.
In an age when crowdsourced data is increasingly used to solve all manner of problems, The Prompt Payment Directory offers just such an opportunity here.