The government has teamed up with bodies representing small businesses as part of its drive to help improve supply chain cash flow for UK firms, including construction businesses.
The Small Business Economic Forum (SBEF) announced on 2 August that its members had signed an agreement to work together to develop new measures to ensure that payments are secured and made on time.
The forum brings together business representatives and small businesses to share their views with ministers on enterprise issues, in particular economic issues facing small firms. Members signing the agreement included the British Chambers of Commerce, the Confederation of British Industry and the Federation of Small Businesses.
Mark Prisk, Business and Enterprise Minister and chair of the SBEF, said: “Large firms have a responsibility to ensure their suppliers are paid on time. These payments are vital to businesses in the supply chain, which rely on contracts with larger firms to thrive and need confidence that they can plan for the future without worrying that payments will be late.
“Working with industry bodies to encourage their members to sign the Prompt Payment Code and commit to making payments on time is a significant step forward.”
The Prompt Payment Code encourages best practice between organisations and their suppliers. Businesses signing up to the code commit to paying suppliers within clearly defined terms and to ensuring there is a proper process for dealing with any issues that may arise.
Late payments continue to be a significant issue for the construction sector. In May the National Specialist Contractors Council revealed that only three per cent of members responding to its State of Trade Survey were paid within three per cent, although the figure rose to 41 per cent in the public sector.
Adam Davis, a member of Palmers’ Commercial Litigation and Dispute Resolution Department and a specialist in construction law, said: “While initiatives like the new agreement and Prompt Payment Code are welcome, sometimes construction firms do need to take more formal steps to recover money owed to them. We can advise on options available, including our mediation service as an alternative to litigation. For more information, please contact us.”