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17 December 2008 Prompt payment code is launched

The Government has launched a new code of practice aimed at increasing the speed of payments to small businesses.

Business Secretary Lord Mandelson introduced the code at a prompt payment summit attended by some of the UK’s top companies, including Asda, British Gas and the John Lewis Partnership.

The Prompt Payment Code, which was developed in partnership with the Institute of Credit Management, focuses on three main areas: a commitment to pay suppliers on time; to give clear guidance to suppliers; and to encourage good practice.

Lord Mandelson urged businesses to sign up to the code, stating it would be essential in helping ‘smaller firms maintain cash flow in the months ahead.’

The Federation of Small Businesses (FSB), which had expressed concerns over the growing problem of late payment for SMEs, hailed the launch of the new code.

‘All businesses must recognise that a strong commitment to prompt payment can be a powerful tool to better buying and will lead to closer and more constructive partnerships between customers and suppliers,’ said FSB National Chairman John Wright. ‘This prompt payment code is a step in the right direction.’