The Department for Business, Energy and Industrial Strategy (BEIS) announced that the Prompt Payment Code (the Code) would be strengthened and reformed as part of its Government Response to their Creating a Responsible Payment Culture Call for Evidence (June 2019). The Code has been reformed and strengthened so it plays a more significant role in setting best principles in payment terms and practices.
The administration of the Code is a separate function to the Commissioner’s statutory complaints handling function and the two functions must remain separate to ensure that statutory functions of the SBC are carried out in a fair and impartial manner and as prescribed by legislation.
There are no plans to relax the requirements of the Code because of COVID19. We understand that businesses are facing challenging times, so it is important that we all work together. It has been encouraging to see that a number of large businesses have stepped up to support their small business supply chains by reducing the time to pay during the pandemic. SMEs (Small and Medium-sized Enterprises) need cash more urgently than ever to help them survive and come through the impact of COVID19.
BEIS (is responsible for the Payment Practices Reporting (Duty to Report) requirements which are used to measure compliance with the Code. If you have any queries concerning Duty to Report, please e-mail: email@example.com (link will open in a new tab)
The Code is voluntary to sign up to – but we want as many businesses as possible to recognise the benefits of signing up to it. There are no associated costs or fees to sign up to the Code or to remain a member.
We will work with companies, offering support and mentoring to improve payment practice compliance and the Action Plan sets out a plan and timescales of how this will be achieved. We will hold regular review meetings of the plan with the signatory.
Government has published guidance which can be read here.
In changes announced on 19 January 2021, the Code has been strengthened by:
- confirming the requirement to pay 95% invoices within 60 days
- introducing an added requirement that 95% invoices from small businesses (with less than 50 employees) must be paid within 30 days (effective from 1 July 2021 for existing signatories)
- requiring small and medium sized signatories to report annually on their payment performance, on a comply of explain basis
- promoting and strengthening the Code website
- requiring signatories to recognise the right of suppliers to charge late payment interest and charges if an invoice is paid late without justification
- stating that applications to join the Code must be signed by the Chief Executive, Finance Director or, in the case of smaller businesses, the company owner
- suppliers should be provided with a contact point for payment queries
The Code Compliance Board considers and responds to complaints about Code signatories. The Board can sanction signatories, including if necessary, removing them from the Code. Compliance is measured using the data submitted by large businesses to the Payment Practices Reporting portal. Smaller businesses will be required to submit an annual declaration. The Office of the Small Business Commissioner will challenge a signatory on their payment practices and policies if their reports suggest they are not complying with the Code, if the annual declaration is not submitted, or if a challenge is received from a supplier or through intelligence received.
The Code Compliance Board membership will be drawn from a cross section of large and small business representative groups, financial services providers, and HM Government. Its membership, once finalised, will be published on the Code website.
The Code Compliance Board will make enforcement decisions and will issue a public statement if a signatory is removed or suspended from the Code. A list of removed signatories will be available on the Code website.
Signatories are expected to pay 95% invoices from all suppliers within 60 days and 95% invoices from small businesses (with less than 50 employees) within 30 days.
Yes, suppliers can use the ‘Complaints’ section of the website to challenge the status of a signatory. The challenge will be investigated by the Office of the Small Business Commissioner and contact made with the signatory who is encouraged to enter a dialogue with the supplier. If it might be helpful, the Office of the Small Business Commissioner will be happy to speak to both parties and support their efforts. Where appropriate, the matter is referred to the Code Compliance Board which will determine what action might be required by the signatory, or whether its status as a signatory should be removed.
Yes, if it trades in the UK or with UK suppliers. To make a commitment to the Code your company must be headquartered or have an employee base in the UK.
Please contact the administrators of the Prompt Payment Code who will give advice.
Paying suppliers or partners promptly and within the agreed payment terms is not only an ethical responsibility but economically beneficial for all parties and the wider economy. Speed and certainty of payment and stable cashflow are essential for all businesses to flourish and grow. A signatory of the code has demonstrated their commitment to prompt payment, which is visible to suppliers, partners, and potential customers. Providing assurance to suppliers and evidencing corporate responsibility which may be beneficial when seeking new opportunities or tendering for new contracts.
We aim to acknowledge your enquiry in 2 days and your form will be reviewed within 5 working days when you will be contact by the Office of the Small Business Commissioner to confirm you meet the criteria or follow up on anything that is unclear.
No. The Code remains a voluntary code of practice. More legislation to create a regulatory code would not be beneficial. It may create unintended consequences in complex supply chains and can create perverse incentives in the system.
To download the logo, please click here. If you require any further information about design and branding guidelines, please contact firstname.lastname@example.org. New signatories will be provided with information about the logo once their status has been confirmed.
All signatories to the Code are listed on the Prompt Payment Code website, and we encourage businesses to check this information. The logo cannot be used unless permission has been granted by the Office of the Small Business Commissioner.
Use of the logo is only authorised while an organisation is a signatory to the Code, and complying with the Code requirements. All rights to use the logo are terminated in the event of an organisation being suspended or removed from the Code, and/or on the direction of the Code administrators.
No. The Kitemark symbol is a mark on goods approved by the British Standards Institution that gives consumers the assurance that the product they have bought conforms to the appropriate British Standard and should therefore be safe and reliable. The Code logo is a demonstration of a signatory’s commitment to responsible payment practice and treatment of suppliers.
Yes, the Code logo was designed for this purpose.
Yes, guidance about using the logo has been sent to all signatories. The logo itself can be accessed here, as a series of jpg images. Please contact us if you require the logo in a different format.
Yes, we are planning to communicate with signatories regularly through website updates, social media, and blog posts, complemented by occasional newsletters.
As a matter of good practice, we recommend regular engagement with suppliers and recommend that activity is used to identify small suppliers and ensure they are paid within 30 days. As an interim measure, the value of total invoice spend could be used as a guide. A small business should also take reasonable steps to inform a signatory that they are a small business and should be placed on 30-day terms.
No, subcontractors are not employees.