Credit Management June 2019

NEWS SPECIAL
Stepping Out
The Prompt Payment Code has taken another
Client: Gravity PR Coverage Yellow News
significant step on a potentially very long journey.
Source: News & Star
Date: 01/05/2019
Page: 16
Reach: 1753
Value: 1028.08
AUTHOR – Philip King FCICM
Philip King FCICM
Chief Executive of the CICM
LAST month the CICM
announced the suspension
of 17 signatories from the
Prompt Payment Code which
the Institute administers
for The Department for
Business, Energy and Industrial Strategy
(BEIS). As one might have expected, it
has generated a significant amount of
media interest, particularly across trade
publications and websites in sectors that
are prominent in the 17 organisations.
Historically, the CICM and the PPC
Compliance Board have had to face
heavy and prolonged criticism about the
Code, and the volume of criticism has
intensified in recent months. Many have
said that the Code lacked teeth, or that
it was not as effective as it might be. Our
response to those criticisms has always
been consistent over several years: action
can only be taken when there is evidence
of poor practice, and that evidence has
only been available from suppliers or
business organisations willing to raise a
challenge.
Despite repeated calls and commentary
from our side, only one trade body or
business organisation has ever raised a
challenge, even though they are the ones
best placed to do so because they don’t
have the accompanying commercial risk.
While they have been quick to criticise,
they have been commensurately slow to
actually do anything about it; carping from
the sidelines is clearly much easier and
helps secure column inches. Ironically,
however, it does little or nothing to help
those members they represent.
Some suppliers, however, have
chosen to raise a challenge themselves.
Where they have done so, the Code has
achieved significant success including
the generation of payments totalling over
£3m since 2014. The Code has also led
to changes to company processes and
procedures, modifications to contractual
terms, mediation where views are at
different ends of the spectrum, and
education of both buyers and sellers
in how to improve their trading
relationship and employ sound credit
management.
Leaving this issue to one side for a
moment, one might ask – quite reasonably
– why we appear to be suddenly ‘naming
and shaming’ companies whose
names have been removed from the
Code. Companies have been removed
historically, but never named publicly, so
what has changed?
DUTY TO REPORT
To answer that, we need to go back to
The Small Business, Enterprise and
Employment Act of 2015. In it, Matt
Hancock, the then Small Business
Minister, introduced a requirement that
large businesses should publicly report
on their Payment Practices behaviour.
The requirement was brought into force
by the Regulations that came into effect
in April 2017 and the process (sometimes
referred to colloquially as ‘Duty to Report’
but more formally known as Payment
Practices Reporting) is now established.
The first reports were submitted towards
the end of 2017 and we are now at a point
where all large businesses should have
published their payment performance. If
they haven’t, a criminal offence is being
committed and they need +44 to (0) 20 be 7264 brought 4700 to
services@kantarmedia.com
book.
www.kantarmedia.com
Where the reported payment record is at
variance with the commitments they have
voluntarily made (i.e by being a signatory
to the Code), we now have a published
reference point from which we can make a
judgement, without a Challenge having to
be raised. We can decide that their names
should be removed from the Code unless,
and until, they report compliance. This is
why 17 have been named as suspended,
and more names are likely to follow in the
weeks and months ahead.
There have been some hefty responses
but the action has been taken based on
those companies’ own data. The fact that
there might be other equally culpable
organisations yet to be named in the same
way is no excuse. Some PR companies
from the respective firms have asked
‘why us and not so and so.’ That is a false
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The Recognised Standard / www.cicm.com / June 2019 / PAGE 10