EOW Reflections: Join the Code

We’re working hell for leather behind the scenes to get the detail of the new Fair Payment Code as near perfect as possible ahead of the launch (date to be announced soon-ish). We are talking to people about it and what the shape of it will be. Businesses will be awarded Gold, Silver or Bronze for how quickly they pay suppliers and how many supplier invoices are paid by the due date. We want everyone aspiring to get Gold. The devil will be in the detail as the saying goes. We know we won’t get everything right, and won’t please everyone, but we’re very grateful for all the support we’ve had so far from those we’ve discussed the plans with.

We need new applications processes and to think through what evidence will be acceptable as proof that applicants are meeting the criteria for a particular award category. We won’t please those who think they are Gold standard when they get Silver, or think they should get Silver when they get Bronze. Come with us and we’ll help you reach Gold.

We’re working out what the guidance needs to cover. What are all the questions we could possibly be asked? We keep coming up with new ones every time we have a conversation. We’re on a journey here (how I hate that phrase) and we will do our best to get companies of all sizes, that want to improve their payment practices, onto the Code to start with and then progress up the ranks.

The new FPC is still a voluntary Code. We can’t please all the people who have told us that it should be mandatory. If a future Government did decide to make a certain number of days the maximum a customer could take to pay a supplier we wouldn’t need the Code. However, until that happens, if ever, a Code has a valuable role to play.

Codes put issues on the agenda, get people talking about them and wondering whether they too could do better. They highlight the ‘right thing to do’ and get people asking ‘why are our competitors on this Code’, ‘being given this award’, and we aren’t. They start to set standards. With our gold award being given to firms that pay at least 95% of all of their invoices within 30 days, the signal from Government is very clear: this is the direction of travel, our signal of intent, what we expect to see from the best and what we’d like to see from the rest. Payment within 30 days is what we want to see and nothing beyond 60 days is ‘fair’. Being a member of the Code also says to would-be suppliers these firms are aiming to pay quickly so we’d rather work with them than others that aren’t on the FPC.

Firms applying to the FPC will also be expected to sign up to certain ways of behaving: having clear, understandable contracts in writing with clear payments terms; taking steps to avoid disputes; agreeing to engage with us, provide evidence that they are paying as they say they’re paying, being prepared for spot checks on their practices, and more.

We aren’t just renewing a payments Code. We’re renewing our efforts to get bigger customers to understand why quicker payments are vital to suppliers, how they build resilience into supply chains, how they give suppliers confidence to invest in skills, innovation, growth. We are renewing our calls to Board members to check on payment practices as a key measure of how well their firms treat their suppliers. We are renewing our calls for firms with contracts to hand out for goods and services to cascade the call for quicker payments and better payment practices down their own supply chains. Help us get the word out and #Everyone Benefits.