CREDIT MANAGEMENT JULY and August 2022

INTERVIEW
AUTHOR – Sean Feast FCICM
and being seen to be an ethical company. It’s
about investors wanting to invest in ethical
companies; suppliers wanting to work with
ethical customers; and future employees with
the best skills coming out of university or
training looking to work with the most ethical
employers.
“The Institute of Internal Auditors gave
guidance to their internal auditors recently to
say ‘here is how you might audit against the
Prompt Payment Code (PPC)’. That’s something
I am delighted to see as it’s a clear signal that
the conversation is opening up.”
SOCIAL BENEFITS
Liz believes that payment practices also
support the ‘Social’ in an organisation’s
Environmental, Social and Governance (ESG)
strategy: “If small businesses sitting in their
local communities get paid quickly, they are
much more likely to have the certainty to invest
in those communities. They are best placed at
understanding local needs, so it’s vital in terms
of levelling up that the importance of those
small suppliers is being recognised.”
The certainty of payment is also critical to
supporting small businesses in their drive for
net zero: “If we don’t get small businesses to
net zero then the whole country won’t get to
net zero, but small businesses won’t invest
unless they have the certainty they are going
to have the money on time,” Liz explains. “So
if we want them to digitise, to make tax digital,
and achieve net zero etc we need to ensure the
smallest companies get paid.”
While changing payment culture is never
going to be achieved overnight (as Liz says it
took 30 years to make seat belts mandatory),
she is encouraged by the level of dialogue
now taking place. This enthusiasm, however,
is tempered with a note of caution: “We need
consistent clear messages,” she says. “There
are 5.6 million small businesses and plenty of
noise, but no-one is hearing a sound at either
end of the debate.
“At the top end we need to think how we
get the message across to big companies to
pay their suppliers on time. But at the other
end we also need to get smaller companies
to understand that they are the talent driving
their bigger customers’ success and that they
therefore have skin in the game – I know they
are fearful they will lose the work – but if you’re
not going to get paid for 120 days you may
be better walking away and finding another
customer who will treat you with more respect.
“There’s plenty of tech out there supporting
smaller businesses,” she adds, “but not all of
those businesses are using tech to its full extent,
for example to chase up invoices without
having to have the human intervention that
they dread for fear it will damage the working
relationship.” Liz is looking to encourage
partnerships working in stewardship: “If bigger
businesses provided induction packs with
smaller suppliers at the point of onboarding,
that would be really helpful. When they state
‘standard terms’, what does that actually mean?
If standard terms are 90 days, then as a small
business you need to understand whether your
cashflow can take it, or how you are going to
fill the gap while you wait to be paid.”
PROMPT PAYMENT CODE
Getting larger organisations to sign up to the
PPC, Liz believes, is very important, for it
obliges those organisations to look at their
processes and consider whether they are fit
for purpose. Liz says that payment processes
are often fine for the organisation that has
created them but seldom take the supplier into
account.
“How many people in a payments department
of a large organisation run their own business
or have been a freelancer?” she wonders. “So
how can we expect them to understand that an
invoice for £300 to a smaller company may be
vital and absolutely has to be paid that Friday
in preference to paying a £30,000 invoice to a
larger company with much deeper pockets that
can survive until Monday? We expect because
we all work in ‘business’ that we all understand
what that means. It doesn’t and we don’t.”
Liz is currently thinking about how the
PPC can be made more attractive to potential
signatories. She sees it as adding further weight
to an organisation’s ethical stance: “It will be
interesting to see how the PPC might be used
as a tool by companies to demonstrate how
ethical they are in the treatment of suppliers
and how it is to their reputational advantage
to be a signatory,” she adds. “I want it to be
something that people aspire to belong to, and
where best practice examples can be shared,
including promoting the benefits of paying
suppliers early and nurturing small businesses
in the supply chain.”
In terms of the Small Business
Commissioner’s relationship with the
Chartered Institute of Credit Management,
Liz has been delighted with the support of
the Chief Executive, Sue Chapple: “The CICM
is very open to the messages we are trying
to communicate and helping us get our
messages out there,” she says. “I see the CICM
as having a vital role to play (in helping to
change payment culture), albeit sometimes
in a different part of the forest, but we will
work with any organisation who can help us in
making the business landscape much clearer
for everybody.”
So does Liz have any intention of pursuing
her childhood dream of a life on the stage?
“Broadcasting is the same thing,” she jokes.
“You are performing. And that was probably a
better place for me to be.
“Give me a platform,” she concludes, “and I’ll
talk about small businesses to anyone.”
“I see the CICM
as having a vital
role to play (in
helping to change
payment culture),
albeit sometimes in
a different part of
the forest, but we
will work with any
organisation who can
help us in making the
business landscape
much clearer for
everybody.”
Brave | Curious | Resilient / www.cicm.com / July & August 2022 / PAGE 19