The Small Business Commissioner, Philip King, joined a meeting with Build UK members (including FIS CEO Iain McIlwee) earlier this month to discuss the changes to the Prompt Payment Code (PPC). PPC is a voluntary code of practice for businesses, administered by the Office of the Small Business Commissioner (SBC) on behalf of BEIS. It was established in December 2008 and sets standards for payment practices between organisations of any size and their suppliers. Being a signatory is often a requirement (or at least a consideration) for projects procured through Government.
As it stands, large businesses that have submitted data to Government’s Payment Practices Portal revealing payment of less than 90% of invoices within 60 days are suspended from the Code, until they achieve at least that percentage. If a suspended signatory fails to engage with the PPC administrators, or compliance is not achieved within a reasonable timescale, the signatory risks being permanently removed from the Code.
Key changes include the new requirement for signatories to pay 95% of invoices from businesses with fewer than 50 employees within 30 days from 1 July 2021. The meeting looked at definitions of employment (in this case it is referring to PAYE employment and not taking into account self-employed or gang/agency workers) and the challenge of identifying suppliers. It was recognised that signatories of the code can use the Common Assessment Standard to identify suppliers with fewer than 50 employees. Question 10 asks ‘Are you a Micro, a Small or a Medium‐Sized Enterprise?’ and any suppliers that state they are ‘Micro’ or ‘Small’ have fewer than 50 employees, in accordance with the EC definitions used within the standard, and this information is independently verified by a certification body on an annual basis.
Commenting on the meeting, FIS CEO stated
“It was good to hear that the PPC is starting to ratchet in to focus on flow of monies through the supply chain and to hear Philip signing off in such a positive way. In the meeting we did take the opportunity to reinforce that late payment and fair payment are linked, but the subject is more complex. We look forward to continuing this discussion with the new Commissioner, Liz Barclay, when she takes over in the summer”.
Build UK has produced a summary of the key points which answers the range of queries raised by members.