Government puts pressure on big business to pay upJune 2009
Listed businesses in the UK are to be urged by the government to endorse a new code on the responsible payment of invoices.
Thirty companies have already signed up to the UK government’s Prompt Payment Code, under which they have agreed to settle suppliers’ bills on time and on the agreed terms.
Among recent new signatories have been Barclays Bank, the do-it-yourself chain B&Q, British Airways and Sony UK. They were among 11 companies to sign at a meeting last month of directors of large companies with Shriti Vadera, the business minister. Vadera announced last month that the government will be writing to all FTSE companies urging them to endorse the code.
The Department for Business, Enterprise & Regulatory Reform established the code with the Institute of Credit Management in December, backed by the Confederation of British Industry, the Institute of Directors and other business groups.
The government has led the way with a pledge to pay its bills within ten days. Phil McCabe, spokesman for the 25,000-member Forum of Small Business, said prompt payment was an essential element of responsible business behaviour. ‘Late payment affects small business cash flow. Normally that is a barrier to growth and trade, but where credit is restricted, as today, it is a matter of life and death. It is incumbent on big business at the top of the supply chain to put good practice in place.’
UK SMEs are owed £10billion ($15.7bn) in outstanding payments, £1.7bn more than a year ago, according to Barclays. Bills take an average 23 days to pay, compared with 20 last year.
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