Fair Payment Code – have you signed up?
Did you know that UK SMEs are owed an average of £22,000 per year? For smaller businesses in particular, poor cashflow can be a major problem. It can not only hinder growth, but it can make the difference between surviving or folding. To help SMEs, the government has launched the Fair Payment Code. We look at what it is and how it could help you.
What is the Fair Payment Code?
The Fair Payment Code is a new scheme aimed at the UK’s 5.5 million smaller firms. It is deigned to help tackle late payments, hopefully resulting in business growth and extra jobs.
The new Fair Payment Code replaces the Prompt Payment Code. It is overseen by the Small Business Commissioner, who is currently Liz Barclay. The new code is billed as being ‘more ambitious, aspirational and robust’.
How does the Fair Payment Code work?
Businesses of any size can sign up to the Fair Payment Code here. The Code is also open to universities, community interest companies, business representative organisations and co-operatives. Government departments and public sector bodies can’t join. This is because Section 68 of the Procurement Act already obliges them to pay all undisputed invoices within 30 days.
To be eligible for the Fair Payment Code, businesses and other organisations must meet the criteria for one of three Award tiers. These are:
- Gold Award. Paying at least 95% of invoices within 30 days.
- Silver Award. Paying at least 95% of invoices within 60 days. 95% of invoices from small businesses (with under 50 employees) must also be paid within 30 days.
- Bronze Award. Paying at least 95% of all invoices within 60 days.
You can apply for any level of Award. If you apply for an Award and don’t meet the criteria, you’ll automatically be considered for a lower level (if there is one).
Each Award is valid for up to two years. If you apply between September and December, the Award will be valid for the next two full calendar years. If you apply at a different time, it will be valid until the end of the following calendar year.
All Award-holders also have to agree to the Fair Payment Code’s requirements to be clear, fair and collaborative with suppliers.
Benefits and safeguards
Having Fair Payment Code accreditation will encourage smaller businesses to work with you. If a smaller business is one of your suppliers, it will be reassured that you will settle its invoices within 30 or 60 days.
However, it’s important to stick to the Code’s rules. The Office of the Small Business Commissioner (OSBC) has put a robust complaints procedure in place. If you don’t settle invoices within the required timeframe, you could put your Award in jeopardy.
That said, the OSBC also wants to support businesses that sign up for the Code. In particular it aims to help signatories to move up from Bronze or Silver Awards to attain a Gold Award.
Sign up today
If you’re interested in signing up to the Fair Payment Code, you can do so here. You can also find a list of helpful FAQs on this page.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.
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