The government’s promised new Fair Payments Code was launched last week to try and tackle late payment problems that can be particularly harmful to small businesses.
How will the Fair Payment Code help?
The code introduces a gold, silver, and bronze system that smaller firms can use to identify business partners who have made themselves accountable to pay fairly and within certain time limits.
The three award tiers have the following requirements:
- Gold award: for businesses paying at least 95% of all invoices within 30 days.
- Silver award: for businesses paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days.
- Bronze award: for businesses paying at least 95% of invoices within 60 days.
Businesses that are granted an award also agree to abide by the principles in the Code of being “Clear, Fair and Collaborative” with their suppliers.
The awards, once granted, last for two years and then have to be reapplied for at the conclusion of that time. There will be a “robust” complaint system so that businesses who don’t meet the requirements of their award, or otherwise comply with the principles in the Code, can be reported.
Dealing with late payments can be a challenge to deal with. While the new Fair Payments Code may help, there are a variety of methods you can use to help reduce the effect of late payments.
For more info, see: https://www.smallbusinesscommissioner.gov.uk/fpc/