News

More contractors suspended from Prompt Payment Code

18 July 2019 | By Neil Gerrard

Alun Griffiths, Galliford Try, Ferrovial Agroman (UK) and Severfield have all been suspended from the Prompt Payment Code for failing to pay suppliers on time.

Along with the contractors, consulting firm Stantec and building materials firm Screwfix were also among a total of 18 companies to be suspended by the Chartered Institute of Credit Management (CICM), which administers the scheme on behalf of the Department for Business, Energy and Industrial Strategy (BEIS).

The companies were found to have failed to honour their Code commitment to pay 95% of all supplier invoices within 60 days.

The Prompt Payment Code’s compliance board, chaired by CICM’s chief executive Philip King, includes the small business commissioner Paul Uppal, and regularly reviews the status of organisations to ensure they are upholding their commitments. Businesses suspended from the Code are invited to produce an action plan that leads to a substantial improvement in payment performance and are reinstated to the Code as soon as they demonstrate compliance.

King said: “We will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant. We are encouraged that of the 18 who have been suspended or removed today, all but one has already submitted action plans to achieve future compliance, and we are working closely with those businesses to support a better payment culture.”

Small business commissioner Paul Uppal added: "Large companies who are not currently meeting the Code standards need to note their unethical payment practices will not be tolerated. The suspension of those who are failing to meet their obligations demonstrates government is committed to ensure small businesses are treated fairly."

The Cabinet Office minister for implementation, Oliver Dowden added: "Paying invoices promptly is vital, particular for smaller businesses, who are the backbone of the UK economy. So I hope that the companies who have been suspended from the code will now get their act together and work hard to improve their performance.

"From September 1st, 2019, any supplier who bids for a government contract above £5m per annum will be expected to answer questions about their payment practices and performance. If they are unable to demonstrate that they are paying 95% of invoices within 60 days, they may be excluded from the process. Atos IT Services UK Limited, which was included in a list of businesses removed from the Code earlier this year, has since been re-instated having satisfied the PPC Compliance Board that it is now meeting the standards and commitments of the Code.”

In April, seven construction firms including Balfour Beatty, Costain and Laing O’Rourke were suspended from the Code, while John Sisk & Son was removed altogether.

Comments

I would really like to know which clients are also guilty of late payment and just how long it takes to pay. I am aware of the rather crude calculations that can be carried out in ratio analysis but a more accurate survey would be welcome.

To have a subbie go under during a project is not only tragic from a human point of view but also from a project management perspective.

I know it is not justified under law but in reality from a cashflow point of view if your client is not paying you it is often very difficult to find the cash to pay your subbies within the 30 day terms.

Rod McLennan, 19 July 2019

Leave a comment