Fair Payment Code

The Office of the Small Business Commissioner has launched the new “Fair Payment Code.”

Overview

The new Fair Payment Code has been launched by the Office of the Small Business Commissioner to encourage businesses across the UK to pay promptly.

Late and long payment times cause disruption to business cash flows and could even lead to business failure. In fact, statistics show that as many as 15% of small and medium sized businesses have previously cited late payments as an obstacle to business growth and success, particularly in competitive or low margin markets.

The new code replaces the previous Prompt Payment Code and introduces the following Gold, Silver and Bronze award categories:

• Gold Award –for businesses paying at least 95% of all invoices within 30 days.

• Silver Award – for businesses paying at least 95% of all invoices within 60 days and including at least 95% of invoices to small businesses within 30 days.

• Bronze Award – for businesses paying at least 95% of all invoices within 60 days.

Businesses can now apply of any of the above award levels which remain in place for two years following which a reapplication is required.

There will also be a robust complaint system in place for businesses to highlight to the Office of the Small Business Commissioner those businesses not meeting the requirements of the category of their award (Gold, Silver or Bronze) or those not following the principles of the Fair Payment Code.

Advantages of holding an award

The obvious key advantage for those supplying award holders is having the added confidence that payments will be made in a timely manner and within the criteria set by the applicable level of the award.

Equally, an advantage to the award holder is giving their suppliers the confidence that they will be treated fairly and paid on time and thereby encouraging suppliers to continue to do business with the award holder.

Of course, even though the holding of an award may give the above advantages, it is always possible that sometimes things will go wrong. If this happens, it is especially important that the parties have agreed an overriding set of terms and conditions governing their contractual relationship. This is because such terms will provide the contractual framework to be relied upon should a dispute ever arise.

Contact us

The Corporate and Commercial team at Wilson Browne Solicitors is ideally placed to advise on all legal aspects of commercial contractual arrangements, including the preparation and implementation of formal terms and conditions for either the supply or purchase of goods or services.

For a confidential and no obligation initial discussion about how we may be able to help, please contact the Corporate and Commercial team.