A leading business organisation in Coventry and Warwickshire says the Government’s stricter Prompt Payment Code (PPC) could be a lifeline to smaller firms struggling with cashflow.
The Coventry and Warwickshire Chamber of Commerce has welcomed the reforms to PPC designed to ensure that suppliers are paid on time – including slashing the time to pay an invoice to 30 days.
The Government says that despite 3,000 businesses being signed up to the code, poor payment practices remain rife and hopes by tightening it up, it will improve the plight of smaller firms.
It adds that Finance Directors or CEOs will be required to take personal responsibility by signing the Code, acknowledging that suppliers can charge interest on late invoices under the Code and that breaches will be investigated.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “Cashflow is always a critical issue – particularly for smaller businesses – and the Coronavirus crisis has brought that into even sharper focus over the past 12 months.
“By tightening the Prompt Payment Code, and strengthening the case for bigger companies to pay their suppliers within 30 days, this could be a real lifeline to those smaller firms which are desperately trying to get as much cash into the business as possible.
“We’d really like this to be the beginning of a culture change that sees prompt payment become standard practice for all businesses because it not only benefits individual firms, it keeps money flowing around the wider economy and increases efficiency.
“We would encourage any companies struggling with cashflow to speak to the team at the Chamber so that we can see what help is available to help them survive the current crisis.”
Suren Thiru, Head of Economics at the British Chambers of Commerce, said: “With firms continuing to face major cash flow difficulties, and our research suggesting that late payments have risen during the pandemic, businesses will be encouraged by the launch of a reformed prompt payment code.
“The improved code must be the first step in creating a culture of prompt payment where affected firms feel confident to call out bad practices, government uses its convening power to tackle this issue in sectors where it is clear that problems exist, and where there is a clear focus on improving relationships between businesses to address the problem of late payment.”