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February 15, 2013

Prompt Payment Code undermined by slow payers, says FPB

The Forum of Private Business (FPB) is calling for changes to the Prompt Payment Code (PPC) as firms with payment terms as long as 90 days look to sign up.

The FPB says Unilever is planning to sign up to the code despite its 90-day payment times for suppliers. The consumer goods giant increased its supplier payment times in 2010 from 60 days to 90 days.

In addition, Sainsbury's has also indicated that it will sign the PPC. Yet only last October, the supermarket increased non-food supplier payment times from 30 to 75 days.

The FPB has long campaigned against late and slow payment by big business and it says this type of behaviour clearly undermines the spirit of the PPC, even if it does not technically breach eligibility requirements.

Phil Orford, FPB chief executive, said: "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."

He added: "Companies like Unilever and Sainsbury's are hoodwinking the public for their own PR purposes by signing, while the small firms who supply them see absolutely no change to cripplingly long payment times."

Later this month, business minister Michael Fallon will name and shame those FTSE 350 companies that have refused to sign up to the code.

Phil Orford said: "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 them signing?"

The FPB proposes that payments to suppliers should be made on or by the end of the month following the month of invoice.