ACCA hosts meeting with The Small Business Commissioner
On 9 October ACCA brought together members from private sector, not for profit and education sectors for a discussion hosted by ACCA’s Head of Technical Advisory, Glenn Collins on the Government’s proposed reform of the Prompt Payment Code (PPC).
Special guest and Small Business Commissioner, Philip King opened by talking briefly about how the PPC had been strengthened in recent years, resulting in tighter controls on reporting and suspensions for failure to uphold. The Enterprise Act in 2017 requiring businesses to report payment practice data gave the opportunity to create benchmarks and measure compliance with the Code. Signatories agree to pay 95% of invoices within 60 days and work toward 30 days. There has been 360 additional signatories since the remit was transferred to the SBC’s office in March 2020.
ACCA member and Corporate Panel Chair, Ashley Smith highlighted his long-running work in this area, stating that an ACCA survey in 2015 had shown 75% of members were not aware of the Code at all. In 2018 this had moved to 70% but showed there was much more work to do improving visibility of the PPC. Ashley’s research has shown that very few suppliers do extensive due diligence on payment history and he believes the PPC can provide a one-stop-shop for credit searches on potential customers. Members agreed that Government should work to collate data from the PPC, CH’s and Duty to Report to provide a single overview of businesses’ payment history.
Peter Lewis, Group Director of Resources at Cartrefi Conwy, highlighted that the value of prompt payment to small businesses is underappreciated. Prompt Payment is treated as a matter of CSR within his current business to ensure local smaller suppliers are treated fairly. Often larger businesses feel more comfortable applying interest and fines than small businesses that may suffer more from the impacts of late payment.
Carl Reader FCCA agreed that prompt payments should be a CSR issue for businesses. While visibility of the code will be important Carl suggested that for smaller businesses or freelancers, the opportunity to win business with large corporates might overshadow the risks presented by data indicating poor payment practice.
Members unanimously agreed that late payment from large corporate companies has the biggest and most detrimental impact on the stability of small businesses. Late payment from large businesses creates a ‘domino effect’, prohibiting the smaller businesses they owe from being able to make their own payments to others on time.
It was highlighted that the current legislation does not incentivise larger businesses to comply with the Prompt Payment Code, and that reforms should focus on finding a way to do so.
Better use of deterrents was a reoccurring theme during discussion. Members believed revised deterrents were needed to strengthen the Code; more transparency around those that pay their suppliers late will help combat the issue of late payment.
All members stated that overall, it is the corporate responsibility of those in the profession to prevent late payment. The importance of paying others on time must be emphasised, potentially through campaigns and the incorporation of the topic into CPD and exams.
Philip King thanked members for their time and welcomed any further evidence on approaches to strengthening the code.