Any questions
We’ve had a busy week. The Code team has taken hundreds of expressions of interest from firms interested in applying for a Gold, Silver or Bronze Award from the new Fair Payment Code. The Comms team has been setting up and running a series of webinars to explain the Fair Payment Code to interested business organisations, trade bodies and firms themselves. I’ve been talking about the Code at events including the Accounts Payable Association afternoon at the House of Lords on Tuesday. It’s all-consuming this week and it’s been very interesting the questions people have raised.
You want to know if they can still sign up to the Prompt Payment Code (PPC).
No. The PPC no longer exists. The Fair Payment Code (FPC) is a brand-new Code to which firms can apply. You don’t sign up to the FPC. You apply, receive details of all the requirements in each of the Gold, Silver and Bronze categories, and if you can provide all the evidence we ask for, the Code Team will decide whether you qualify for a Gold, Silver or Bronze Award for two years.
Former signatories to the PPC are asking whether they automatically move over onto the FPC.
No. If you were a PPC signatory and you were meeting the requirements to pay at least 95% of your invoices within 60 days, and you were paying at least 95% of your invoices from small suppliers within 30 days, it’s likely that you will qualify for a Silver Award under the FPC. However, the FPC also requires you to commit to a set of values, principles and behaviours around being clear, fair and collaborative with your suppliers. It is possible that you’re paying your invoices as per the FPC requirements but not treating you suppliers fairly by giving them clear terms in contracts, or unfairly disputing invoices to delay payments. Unless you’re prepared to commit to the good payment behaviours you won’t get an Award. We’re aiming to improve the payment culture in the UK too.
There are lots of questions being asked about the date from which payment days or ‘days to pay’ should be counted.
The guidance has always said that you should count the days you take to pay an invoice from the date of the receipt of that invoice. By ‘receipt’ we mean the date on which the invoice is received in your organisation, no matter which department, and by whichever channel. We know however that firms have been interpreting ‘receipt’ in a whole range of different ways such as the date the invoice is finally approved and sent to the accounts payable department. The invoice may have been in the organisation for weeks before it’s approved. Accounts Payable may pay it in 30 days but you can’t count that as 30 days to pay. That is 30 days plus the number of days that invoice has been in your organisation going through the approval process. I’ve seen that work out at 210 days in total. If you are claiming to pay 95% of your invoices in 30 days that has to mean 30 days, not 30 days plus xx. For many firms meeting the FPC requirements will mean root and branch review and upgrading of their processes.
There is still a lot of confusion between the Payment Performance Reporting Regulations and the Code.
They are two totally separate things. The biggest firms in the UK must report their payment performance under the Payment Performance Regulations to the Department for Business and Trade every 6 months. That not ‘should’, that’s ‘must’ and there are legal penalties for not reporting when you should be. Find the details here. The Code (formerly the Prompt Payment Code which is now closed, and new the Fair Payment Code) is entirely voluntary. However, if you do apply and are granted an Award on the Code, whether Gold, Silver or Bronze, you will have committed to complying with the requirements of that Award. If you are a large firm reporting your payment performance every 6 months to the Department for Business and Trade, you can use that data as evidence for your payments when you apply for an Award from the Fair Payment Code.
The most frustrating question so far came from the person who said ‘I didn’t know anything about the new Code until I saw it on LinkedIn’.
We are doing our utmost to get the message out that there is a new Fair Payment Code. LinkedIn posts are one of the most effective ways to reach people, but we are sending out messages everyday to former PPC signatories, politicians, the press and media, trade bodies and many more. Please, please do help us by spreading the word to your own supply chain and more. We want as many firms as possible awarded and celebrating their good payment practices. When suppliers, particularly the smaller one, get paid quickly. #EveryoneBenefits.