The U.K.’s Chartered Institute of Credit Management (CICM) has named-and-shamed some of the nation’s largest organizations for their habit of failing to pay their suppliers on time, reports in The Wall Street Journal said on Wednesday (July 17).
The credit management industry body has named 18 organizations that it found to be in violation of the Prompt Payment Code, and has removed those firms from the list of the Code’s signatories, reports said. The voluntary code of prompt payment requires businesses to pay 95 percent of all supplier invoices within 60 days.
Despite the CICM’s name-and-shame approach, the body does not have the authority to issue any fines or other penalties on organizations it has found to be in violation of the code. Rather, once a quarter, the body releases its compliance report on behalf of the government, the publication explained.
The 18 organizations suspended are: AB World Woods, Alun Griffiths, BAE Systems (Oman) Ltd., BAE Systems Applied Intelligence Ltd., BAE Systems Global Combat Systems Ltd., British American Tobacco, BT PLC, Centrica PLC, De La Rue Holdings, Domino U.K., Ferrovial Agroman, Fujitsu Services, Galliford Try, Maintenance Management, Prudential, Screwfix, Serverfield and Santec U.K.
These companies will be allowed to rejoin the code after they develop a plan to improve their B2B payment practices and demonstrate compliance with the 60-day term agreement, the CICM said.
The Journal highlighted U.K. government research that has found about one-third of payments to small suppliers are late, with 20 percent of organizations facing cash flow challenges as a result of delayed invoice payments.
Currently, the government has the ability to publicly name the organizations that are in violation of the code, resulting in potentially negative publicity. But policymakers are also considering new rules that would provide the Small Business Commission with the authority to issue fines against businesses that fail to pay vendors on time, or to issue binding B2B payment requirements, reports said.
“We will continue to challenge signatories to the code if the obligatory payment practice reporting data suggests that their practices are not compliant,” said CICM Chief Executive Philip King in a statement.