CM July_August 2019

CMNEWS
A round-up of news stories from the
world of consumer and commercial credit
Written by – Sean Feast FCICM and Alex Simmons
CICM highlights success of Code
in changing payment behaviour
FIFTEEN of the seventeen
businesses highlighted
for poor payment practice
in May have filed action
plans or are preparing
submissions to improve their treatment
of smaller suppliers, demonstrating the
effectiveness of the Prompt Payment
Code.
Philip King FCICM, Chief Executive
of the Chartered Institute of Credit
Management (CICM), says firms have
responded positively to approaches by
the CICM and the PPC Compliance Board:
“Businesses clearly see the value in
being a signatory to the Code and, more
importantly, the potential damage to
their reputation if they fail to honour the
commitments that the Code demands.
“What is most pleasing is the innovative
way in which firms are addressing
the challenge and demonstrating best
practice.”
New initiatives which show best
practice have come from:
* Engie Services Ltd – which has
launched a new policy to mandate the
use of purchasing cards for all purchases
of £500 or less, giving suppliers
immediate payment and reducing
invoice volumes by 20 percent.
* Kellogg Brown & Root Limited –
which is embarking on an awareness
programme and further training for all
staff with a procurement role to reinforce
the need to settle more than 95 percent of
all supplier invoices within 60 days.
* DHL – which is re-setting its payment
runs to a full ten days below the
contracted payment terms (to 50 days)
to guarantee that suppliers are paid early
or on time. This overcomes a previous
complication with payment runs being
fixed on a particular date in every month,
and what happens when a date coincides
with a weekend or bank holiday.
“The purpose of the Code has always
been to promote a culture of best practice
in the treatment of suppliers, and this is
proof positive that the Code is working,”
Philip added.
Companies who sign up to the Code,
administered by the CICM on behalf of
Government, pledge to uphold its best
practice for payment standards. This
includes the commitment to pay 95
percent of all supplier invoices within 60
days.
The Prompt Payment Code
Compliance Board, chaired by Philip
King and including the Small Business
Commissioner Paul Uppal, regularly
reviews the data reported by large
companies under the Payment Practices
Reporting Regulations to ensure they are
upholding their commitments.
Businesses suspended from the
Code are invited to produce an action
plan setting out how they will achieve
compliance within an agreed period.
When they have achieved compliance
their status as a Code signatory is
reinstated. If they do not, they are
removed.
Philip says the actions of a minority
who continue to treat their suppliers
unfairly, however, remains a concern:
“We will continue to challenge
signatories to the Code if the obligatory
Payment Practice Reporting data, or a
specific challenge from a supplier or
representative body, suggests that their
practices are not compliant with the
Code.”
Meanwhile, Stephen Bowcott,
Chief Executive of John Sisk, defended
his company’s removal, claiming to
be ‘one of the best payers in the
industry’. He said that as many as half
of the ‘small ticket’ invoices sent to the
firm had some kind of error and that his
company ‘did not have a problem’ with
late payment. John Sisk reported 72
percent of invoices were paid within 60
days in its last PPR submission to end of
December 2018.
“Whereas incorrect invoices and
disputes are always a cause of late
payment, they are also used by some
firms as a convenient explanation that
can sometimes be exploited,” Mr King
added. “Either way, they highlight the
need for smaller firms to adopt bestpractice
credit management and for
larger firms to take responsibility in
helping the supply chain to understand
the process they need to follow to get
paid on time.”
STOP PRESS: The CICM has welcomed
proposed new powers for the Small
Business Commissioner to tackle
late payment, including a further
strengthening of the Prompt Payment
Code and a new fund to encourage
businesses to use technology to
simplify invoicing, payment and credit
management.
A full report in our next issue.
The Recognised Standard / www.cicm.com / July/August 2019 / PAGE 6