Griffiths urges big business to play by the book on prompt payment

Large businesses should play by the rules when it comes to paying their suppliers promptly, Small Business Minister Nigel Griffiths said today.

Speaking on the fifth anniversary of the formation of the Better Payment Practice Group (BPPG), Mr Griffiths said large firms should stop altering payment terms to the detriment of small suppliers.
Mr Griffiths said:
“ Large firms imposing lengthy payment terms hits small suppliers. “ While things have improved, late payment is still a problem that can have a crucial impact on the survival of a small business. More large firms need to learn to play fair.”

The concern about the conduct of larger enterprises regarding late payment comes as the BPPG marks five years of work to raise awareness of the problems caused by late payment, specifically to smaller and medium-sized enterprises, and to improve Britain’s commercial late payment culture.

Successes of the BPPG and the better payment campaign include:

• the average time taken to receive payment of invoices stands at 46 days – compared with 52 days in 1997;
• the number of small businesses with written credit terms has risen to 44 per cent – up from 26 per cent in 1996; and
• 80 per cent of small firms now check the creditworthiness of a new customer – compared with 63 per cent in 1997.

The BPPG say many PLCs are still not reporting their payment times though they are required to do so by law.

Under the Companies Act 1985, all PLCs and their large subsidiaries must state in their annual reports the average length of time it takes them to pay their bills. In 2002, over 20% fewer companies reported their payment times (according to the Federation of Small Businesses’ Private Sector Payment Performance League Tables) than in 2001.

To combat this, the BPPG is promoting a culture of better payment and disclosure amongst larger businesses by encouraging accountancy firms and trade bodies to advise their clients of the benefits of prompt payment and the ill effects of late payment.

Since its inception in 1998, the BPPG has promoted the principles of a better payment culture through a Better Payment Practice Code, education campaigns, free literature, a website with credit management and debt recovery information and a national seminar programme. It also supports the publication of private and public sector payment performance tables.

Over the last five years, nearly 1,400 organisations have signed up to the Code, representing 20% of the UK’s Gross Domestic Product. Additionally in 2002, the BPPG provided small businesses with 708 written responses to queries concerning late payment and this website was visited 140,405 times (over double 2001’s total: 67,253).

Mr Griffiths added:

“ The Better Payment Practice Group has achieved a lot over the last five years to raise the profile of good credit management as well as provide small businesses with the tools and techniques to help them resolve payment problems.

I’m working with the BPPG to encourage accountants to urge their large clients to report their payment times promptly, and writing to late paying businesses to find out why they’re slacking.”

Clive Lewis, Chairman, Better Payment Practice Group, said:
“Through our education initiatives, our code of practice and through the free information available on our website we’ve worked hard to raise awareness of the remedies available to small businesses under the Act and to effect a sea change in attitudes to paying on time. However, many larger firms impose their payment terms because they believe smaller firms need their custom, so there’s plenty of work still to do.”

Photograph available upon request.

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