The U.K.’s Chartered Institute of Credit Management has removed or suspended a total of 17 companies from the Prompt Payment Code, a move likely to cause further doubt over whether the voluntary code of B2B payments conduct is effective.
The CICM announced Sunday (April 28) that a review of the Payment Practices Reporting data, which is information large organizations are required to make public about their supplier payment practices, resulted in finding 17 companies out of compliance with the Prompt Payment Code.
The voluntary code is a pledge among organizations to pay their supplier invoices in a timely manner, and to pay 95 percent of all supplier invoices within 60 days. The initiative is part of the government’s efforts to crack down on delayed and late supplier payments that experts say have a particularly detrimental impact on small suppliers’ cash flow.
Though thousands of companies have signed the Prompt Payment Code, the CIMC’s latest review found 17 have had to be removed or suspended for various reasons. Five were removed for non-compliance and for not providing a plan as to how they would adhere to the code, the CIMC said, while 12 were suspended for not adhering to the code. These 12 businesses, which include Vodafone and Rolls-Royce, have committed to making changes to find themselves back in compliance.
Separate reports in Reuters on Monday (April 29) noted Rolls-Royce announced its suspension from the Prompt Payment Code, noting in a statement that “the significant volume of invoices we receive from our large suppliers — and the removal of the consideration of our preferential treatment for smaller supplies — has pushed us below the compliance criteria.”
According to the CIMC, one company has been reinstated to the Prompt Payment Code after showing data of paying vendors within 60 days.
Additional companies are expected to be removed or suspended from the code in the year’s second quarter, it added.
“The Board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name the publicly,” said Philip King, the CICM’s chief executive and chair of the Prompt Payment Code Compliance Board, in a statement.
In another statement, Small Business Commissioner Paul Uppal reinforced his support of King’s efforts, adding that the Commission has recovered more than $4.5 million in payments owed to small suppliers.