Credit Management APRIL 2019

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CMNEWS A round-up of news stories from the world of consumer and commercial credit Written by – Sean Feast FCICM and Alex Simmons Poor awareness impacts effectiveness of PPC POOR awareness, and the reluctance of small businesses to challenge larger businesses into the conduct of their payment behaviour, continue to hamper the success of the Prompt Payment Code, and its perception amongst stakeholders and the media. This was the view expressed by Philip King FCICM, Chief Executive of The Chartered Institute of Credit Management at a Workshop on Late Payment hosted by Bill Esterson MP, Shadow Small Business Minister involving senior executives from business organisations and industry. Philip said that while the Code had succeeded in collecting £3 million, and resolved issues involving high-profile transgressors such as Diageo, there was still much more that could be done: “The reluctance of small businesses to challenge the Code, and the failure of trade associations and business groups to challenge on behalf of their members are impacting how the Code is perceived and used,” he explained. He also highlighted the limited resources available to the CICM to administer the Code, and the lack of any historic funding from Government as having an impact: “The administrative challenges and costs associated with running a compliance board cannot be underestimated,” he added. But he also said that one solution was for more effective regulation: “As suppliers are reluctant to come forward, effective regulators, with the power and resources to investigate, publish findings and impose punitive fines would inevitably be more effective, but might have unintended consequences.” Within the discussions, it was highlighted that there was no process or powers for there to be an independent verification of the accuracy of signatories to the Prompt Payment Code. Smirnoff: A Diageo brand. Bill Esterson said that the spotlight on Carillion made it clear that the Prompt Payment Code, despite having more than 2,000 signatories, was not working effectively. Carillion had a reputation as a notorious late payer, with suppliers waiting up to 126 days to receive the payments they were owed. In clarification, Philip King pointed out that no challenge had been received about Carillion, and as such, no investigation had taken place since the Compliance Board did not have the authority – or the mandate – to investigate. It was suggested that the PPC Compliance Board must have the powers to refer to itself to investigate. The duty to report information had led to transparency in larger companies, but further reporting and transparency was needed, and cross-verification with the Code. The Cabinet Office and Crown Commercial Service had undertaken a consultation on Prompt Payment by Government Suppliers, and this included measure from September this year for contracting authorities to exclude suppliers from contracts of a value greater than £5 million if they cannot demonstrate fair and effective payment practices with their suppliers. There was little evidence yet that the new complaint handling website established by the Small Business Commissioner was making it any easier for small business owners to resolve late payment disputes. Bill Esterson suggested that more pressure needed to be applied on the Government’s biggest suppliers to meet the commitment to pay 95 percent of invoices within 60 days, and move towards adopting 30 day payment terms as the norm. He also said that strict criteria on payment practice needs to be embedded in the Government’s procurement policies. promptpaymentcode.org.uk STOP PRESS PHILIP Hammond, the Chancellor, has announced a crackdown on late payment by insisting that big companies should appoint a non-executive director who would be responsible for reducing late payments to smaller suppliers. They must also publish payment practices in their annual reports. The Government already obliges larger companies to publish their payment data twice a year on a website. The Recognised Standard / www.cicm.com / April 2019 / PAGE 6
Mercedes accelerates out of the block MERCEDES-Benz is to pilot blockchain technology with the potential to ‘fundamentally revolutionise its procurement processes’. The carmaker has developed a blockchain prototype containing contract clauses, including around sustainability requirements that can be viewed by all participants in the supply chain. The system, which makes use of blockchain’s secure distributed ledger technology, also offers opportunities to track and trace components and raw materials. Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars, says the transmission of contracts to each member of the supply chain is the prerequisite of cooperation with our suppliers, especially in terms of sustainability and ethical conduct: “The blockchain prototype opens up completely new ways to make purchasing processes simpler and safer.” Mercedes and software company Icertis teamed up to create ‘a consistent documentation of contracts in the supply chain’. The carmaker said it ‘requires its direct suppliers to vigorously pass on and control standards and contractual obligations with regard to working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain’. “The prototype allows a transparent mapping and understanding of this transmission across the entire supply chain. Should one of the sub-suppliers deviate from the contractual obligations, this becomes visible in the blockchain, similar to a secure accounting system,” Mercedes says. “Acceptance by suppliers and partners is now being tested in a pilot project and feedback is being obtained. Consistently establishing blockchain technology with all suppliers in the respective supply chain is a fundamental requirement for the achievement of the goal: close cooperation for more sustainability.” mercedes-benz.co.uk >NEWS IN BRIEF TECHNICAL COMMITTEE THE Technical Committee met recently and discussed a number of important topics relevant to members, such as: HMRC consultation entitled ‘Protecting your taxes in insolvency’ and preferential creditors status from April 2020; vexatious claims and discussions around the potential size of the problem; data sharing with SMEs; Pay.UK’s ‘Confirmation of Payee’ service which aims to reduce the risk of payments sent to the wrong account, and benefits/risks associated with the service; and the CICM responses to recent consultations including BEIS ‘Creating a responsible payment culture’, HM Treasury’s ‘Breathing Space policy proposal’ and the Ministry of Justice ‘Review of 2014 enforcement agent reforms’. Poor management THE Financial Conduct Authority (FCA) has found that three asset management firms – Hargreave Hale, RAMAM, and Newton – breached competition law – the FCA’s first formal decision under its competition enforcement powers. The FCA has fined Hargreave Hale £306,300 and RAMAM £108,600. The FCA has not imposed a fine on Newton because it was given immunity under the competition leniency programme. Self-employed growing DATA from the Office for National Statistics (ONS) revealed the number of selfemployed people in the UK rose by 63,000 to 4.84 million in the last quarter of 2018. The nation’s strong labour market is being powered significantly by the self-employed sector, which now equates to almost 15 percent of the UK’s workforce – almost as much as the entire public sector. ons.gov.uk Clever Thinking SHAWBROOK Bank has provided data firm DueDil with a £3.5 million Growth Capital facility to help fund the company’s expansion plans. DueDil’s API and web platform use proprietary matching technology to link billions of company data points from authoritative sources, providing insight through its Business Information Graph. Companies leverage this information to build their go to market strategy and create a seamless customer onboarding journey. The London-based firm works with more than 400 companies across financial services, fintech and technology sectors, including big brands such as Transferwise, Santander, Growth Street and Paymentsense. shawbrook.co.uk Billhop launches card collaboration with Visa BILLHOP has launched a collaboration with Visa to enable small businesses across Europe to pay their suppliers using a card, regardless of whether or not the supplier accepts card payments, to help improve working capital for small businesses. The collaboration with Visa will allow Billhop to expand across Europe, including markets such as France, Italy and Spain in the first half of 2019. Billhop, which has already launched in Sweden and the UK, is a payment service enabling businesses to pay invoices with cards regardless of whether the end beneficiary accepts card payments or not. No onboarding of the end beneficiary is required allowing Billhop to enable 100 percent of supplier payments on card instantaneously. On the back of card payments made by small and large businesses, Billhop says it has experienced a significant pace of growth in Europe generally. Small companies benefit from the grace period on their existing credit cards, whereas larger corporations use bespoke credit cards as a working capital financing solution when paying larger ticket suppliers through Billhop. billhop.com/gb The Recognised Standard / www.cicm.com / April 2019 / PAGE 7
Page 1 and 2: CREDIT MANAGEMENT CM APRIL 2019 £1
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Page 9 and 10: Victory for CICM and EFTA on short-
Page 11 and 12: Utility Week Conference focuses on
Page 13 and 14: OPINION As simple as ABC Assume not
Page 15 and 16: OPPORTUNITY KNOCKS When MBNA was so
Page 17 and 18: CICMQ Shell maintains high standard
Page 19 and 20: Herb ran a business called Kalyx, a
Page 21 and 22: The Recognised Standard / www.cicm.
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Page 25 and 26: OPINION Data Availability Developin
Page 27 and 28: TRADE TALK SIZE MATTERS The outcome
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Page 31 and 32: OPINION AUTHOR - Lawrie Holmes fina
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Page 37 and 38: PAYMENT TRENDS AUTHOR - Jason Braid
Page 39 and 40: ADVERTORIAL - HIGH RADIUS HIGHRADIU
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Page 45 and 46: SPEED UP YOUR AML SERVICEWITH SMART
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Page 53 and 54: LEGAL MATTERS AUTHOR - Peter Walker
Page 55 and 56: Are you a Leader or follower? CICMQ
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Membership Benefits CICM membership
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BRANCH NEWS FULL NAME: Syed Nauman
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CREDIT CONTROLLER TAKE OWNERSHIP Bo
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Credit Management APRIL 2019

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