Credit Management September 2019

OPINION
Doing the right thing
Poor payment practice is often more about process
than intent.
AUTHOR – Philip King FCICM
Philip King FCICM
INTEREST in the Prompt Payment
Code – and the issue of late payment
generally – has rocketed in recent
months. Partly this has been to do
with political meanderings, and
the need to be seen to be tough on
businesses that mistreat smaller suppliers,
but moreso since the CICM began naming
those signatories to the PPC whose payment
performance falls outside of their voluntary
commitment.
What has been particularly interesting
to me is that poor payment behaviour is not
being identified by suppliers complaining
about how they are paid, or even the
business organisations that represent
them, but rather through the Payment
Practices Performance data submitted to
the government portal by the organisations
themselves.
A great deal of my time has been spent in
recent weeks meeting with senior executives
within these organisations and others who
want to improve their performance and be
reinstated on the Code. Indeed, I have taken
part in well over one hundred such meetings
or calls in the last six months alone.
The process involves the submission
of an action plan setting out what the
organisation is doing (or intending to do)
to achieve compliance. My discussions are,
for obvious reasons, confidential, but I can
tell you that they are more often than not
positive, encouraging and, in some cases,
nothing short of inspirational.
What has been particularly interesting
to me throughout this time is that,
contrary to views often expressed in the
media and elsewhere, the majority of
these organisations genuinely want to pay
suppliers more quickly. Many recognise
the importance of their supply chain and
put significant effort into supporting it and
ensuring it is sustainable. The really smart
ones understand that the quality of their
offering can be dependent on the quality of
the supply chain and making it stronger is
in their own interests as much as in anyone
else’s.
PROCESS AND INTENT
In many cases, the reasons for not achieving
compliance are more about process than
intent, and the action plans being produced
are tackling inherent weaknesses that can
be addressed by devoting sufficient time,
energy and focus to them. If we remember
that the original intention of the Prompt
Payment Code was to encourage and
promote better payment behaviour, it is
exciting to see real tangible evidence that
businesses do take supplier relationships
seriously, and that being a signatory to the
Code is not about simply ticking a box.
The impact of late payment, of course,
goes far beyond a simple hit on cashflow. Its
longer-term effects can damage businesses,
mental health, jobs, competition, the
economy, and far more. That’s why the
CICM is so heavily involved in the debate,
why it believes it is so important, and why
it has introduced a ‘Best Payment Practice’
category for the CICM British Credit Awards
2020.
The award will recognise a business
that can demonstrate having made real
efforts to ensure its supply chain is truly
sustainable and supported, delivering real
benefits through the use of innovative and
creative ideas. Our awards event isn’t until
5 February next year so it might seem a
bit premature but there’s nothing to stop
an organisation registering their interest
already.
Contrary to views
often expressed in the
media and elsewhere,
the majority of these
organisations genuinely
want to pay suppliers
more quickly.
If you work for, or know of, an
organisation that is leading by example in
the way it manages its supply chain, please
give it a nudge. Publishing good news
stories is never going to be in the interests
of the media or lobbying organisations, yet
those positive stories can play a major part
in delivering the culture change we need,
and we should applaud and celebrate those
who do the right thing.
Philip King FCICM, Chief Executive
of the Chartered Institute of Credit
Management.
The Recognised Standard / www.cicm.com / September 2019 / PAGE 13