Government Consultation

Source - Construction News 

New standards, designed to toughen up the Prompt Payment Code, are being explored by the government.

Getting businesses to commit to paying smaller firms within 30 days and adding additional payment measures are two of the changes being considered. The alterations are being explored via a consultation launched by the Small Business Commissioner.

At present, firms signed up to the code must pay 95 per cent of invoices in 60 days. The commissioner has asked for views on introducing a second criteria that firms pay 95 per cent of invoices from small businesses within 30 days.

Last year a string of large contractors, including Balfour Beatty, Kier and Laing O’Rourke, were suspended from the code after failing to pay 95 per cent of their invoices inside a 60-day period. All have since been reinstated after improving their payment times.

The Small Business Commissioner is also considering adding new measures to the compliance criteria, including the percentage of invoices paid to terms and the average time taken to pay invoices. Respondents are being asked how long businesses should be given to comply with any new measures.

Creating a prompt payment logo that compliant firms can use and display is also being considered.

The commissioner is also asking for views on whether some of its current approaches should continue, such as publishing information about suspensions and removals and whether the SBC should be able to approach firms it is told are not complying with the code.

The survey is part of the Department for Business, Energy and Industrial Strategy’s plan to strengthen the code. Last year saw the department transfer the administration for the code from the Chartered Institute of Credit Management to the Small Business Commissioner. The department said the consultation on new measures represented the next step in making the code more effective.

The consultation closes on Friday. You can complete the survey here.