Prompt Payment to Suppliers
The GBC requires businesses to commit to pay 95% of their suppliers on time with best endeavours to pay all organisations within 30 days unless otherwise mutually agreed (and not unilaterally imposed or signed under duress by them).
Previously, the Good Business Charter required organisations with more than 50 employees to sign the government’s Prompt Payment Code. This is now the Fair Payment Code which has a bronze, silver and gold rating. The focus for the GBC on this component is paying suppliers promptly. Other aspects of the Code such as clear and easily accessible guidance on payment procedures and an adequate system to deal with complaints and disputes are expected to be implemented as part of ensuring the commitment of prompt payment is met. We encourage prioritisation when changing processes to look at paying small suppliers (under 50 employees) to 30-day payment terms.
Why Prompt Payment to Suppliers Matters
Every year small businesses go out of business because they are not paid on time. They can be bullied into having to accept long payment terms or suddenly subject to monies being withheld.
Paying promptly is a matter of respect – simply doing for others what you would also like to happen to you. Too often it is seen as an operational issue – but should be something boards address and are aware of as part of being socially responsible. It shows respect to your suppliers and treats them as you would wish to be treated.
Sobering stats on late payment
Prompt payment matters!
Good Business Charter accredited, Clive Owen LLP, recognised as one of the first Fair Payment Code awardees
Bellevue Law: Prompt payment - a fundamental of good business
