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 with 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 in transition to a Fair Payment Code which will have 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.

400,000

businesses face winding up because of late payment.

FSB Small Business Index, 2022

> 4,000

signatories to the Prompt Payment Code.

Office of the Small Business Commissioner, 2023

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

Summary of FSB’s Time is Money report and the impact on small businesses of late payment.

Prompt payment matters!

Read more about why paying on time really is the responsible thing to do.

Hear what TSB did

Kate Osciadacz, Head of Responsible Business on how they improved their payment systems with impressive results!

Resources

Fair Payment Code

Our Stance On – Special Exceptions to our Prompt Payment requirement

We recognise that for some sectors the standard set out in the Prompt Payment Code is difficult to commit to such as where the industry norm is 60+ days payment terms or where short payment terms are not feasible because of the transit time from despatch to goods received.  This is why we have placed the focus on paying on time and this means it is very important to us that terms are mutually agreed, not unilaterally imposed on suppliers and not signed under duress by them. We accept that in these cases it may not be possible to reach the goal of 30 days payment, though would expect due consideration to be given where there are small businesses in your supply chain who may experience real hardship with longer payment terms.