December 2016 Credit Management magazine

CMNEWS
A
round-up
of news stories
from the world
of consumer and
commercial
credit.
By By Sean Feast and Alex Simmons
CICM URGES MORE SUPPORT TO
DRIVE BETTER PAYMENT PRACTICE
Philip Ling
A
report from the Federation of Small
Businesses (FSB) into the impact
of poor payment practice has been
welcomed by the Chartered Institute
of Credit Management (CICM), with a call for
more support for the Prompt Payment Code.
Philip King Chief Executive of the CICM,
has also challenged the FSB’s proposal that
signatories to the Code should be given ‘three
strikes’ before being removed from the list,
saying that it will create too much uncertainty
into how a ‘strike’ should be defined.
“Signatories can already be removed
after only one challenge if the complaint is
upheld and poor practice has been proven,”
he explains, “and ‘three strikes’ might allow
them to abuse the system and their suppliers.
The principal rationale behind the current
challenge process is to find a positive
resolution,” he explains, “and to this end
the Prompt Payment Code has been a huge
success.
“There is no doubt that the Code needs
further support and resource, but we should
not confuse strengthening the Code with a
suggestion that the Code has so far failed,”
he says. “The Code has been working fully as
intentioned, challenges have been made and
upheld, and payment issues resolved. What is
really lacking is wider publicity and support.”
The CICM already works closely with
the FSB and Philip agrees with much that is
contained within the FSB’s report, ‘Time to
act: the economic impact of poor payment
practice.’ He feels, however, that a better use
of existing mechanisms could have a dramatic
impact on reducing the late payment burden:
“The Government has been
understandably distracted by events and
must now focus more on exploiting the
initiatives that are already in place. Where
we completely agree with the FSB is that
the appointment of the new Small Business
Commissioner by Government should be
accelerated. We believe that the role of the
Commissioner is vital and should include a
responsibility to drive the Code and ensure
that the Commissioner role complements it.
“We also think that the creation of a
dedicated late payment taskforce would be
helpful in driving more businesses to sign up
to the Code and encouraging suppliers to
formally challenge poor payment practice.”
The FSB report claims that existing
policy interventions have had no discernible
effect on tackling problems around the UK’s
poor payment culture in the last five years.
Mike Cherry, National Chairman at the FSB,
believes the UK now risks having a business
culture where it is acceptable not to pay an
SME on time.
“Small businesses have to run a tight ship
with their cash flow, and as they struggle with
increasing business costs on one hand and
an uncertain domestic economy on the other.
They should not also have to struggle with
the stress, time and money required to chase
overdue payments from corporate giants.”
Mr King agrees, but says that it is not
only larger firms who extend payment terms:
“While it is the larger businesses that will
attract the media attention, there are many
smaller businesses who are also guilty of
placing unnecessary pressure on their own
supply chain,” he adds.
The CICM administers the PPC on behalf
of the Department for Business, Energy and
Industrial Strategy.
TIME TO ACT
THE ECONOMIC IMPACT
OF POOR PAYMENT PRACTICE
Small businesses have to run a tight ship with their cash
flow, and as they struggle with increasing business costs
on one hand and an uncertain domestic economy on
the other. They should not also have to struggle with
the stress, time and money required to chase overdue
payments from corporate giants.
Published: November 2016
@fsb_policy
fsb.org.uk
6
December 2016 www.cicm.com
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