New Fair Payment Code 'Will Reward Firms that Treat Suppliers Fairly'

A new Fair Payment Code to make sure smaller firms get paid on time is to be introduced later in 2024.

The new Code, an initiative from Small Business Commissioner, with the support of the Department of Business and Trade, will reward business for adopting fair payment practices for suppliers of all sizes, and small suppliers in particular.

The Code will include a set of fair payment principles that companies are required to sign up to, as well as three award categories:

• Gold: for companies paying 95% of their suppliers within 30 days.
• Silver: for companies paying 95% of their small business suppliers within 30 days and all other suppliers within 60 days.
• Bronze: for companies paying 95% of suppliers within 60 days.

The new Code will replace the Prompt Payment Code, which has been operational since 2008. There are more than 5,000 signatories to the existing Code, where firms which have committed to paying at least 95% of their suppliers within 60 days and 95% of small suppliers within 30 days.

The office of the Small Business Commissioner said the new Fair Payment Code will be more ambitious in setting higher standards, including an exemplar ‘Gold’ category for those firms paying suppliers within 30 days. This goes beyond the existing Code’s requirements, and there will also be a more rigorous application process, a two-year limit on awards and a more robust approach to enforcement.

The Small Business Commissioner, Liz Barclay, said: “I am delighted to announce a new Fair Payment Code will be launched this autumn. The new code will reward businesses that treat their suppliers fairly and pay them quickly. It will also include an ambitious new Gold Award which aims to make 30-day payments the new standard for which businesses can aim.

“We need sustainable, resilient businesses at all levels of the supply chains, to achieve the growth the economy needs. That means paying everyone from the largest supplier to the sole trader quicker, so they have the confidence to invest, improve productivity and grow. Fair payment terms and on time payments are the key.”

Feedback from stakeholders highlighted a number of issues with the Prompt Payment Code’s operation which is affecting its effectiveness. A new Fair Payment Code will be more ambitious in setting higher standards, aspirational by supporting business improve payment practices and have more a more robust approach to compliance and enforcement.

“We need sustainable, resilient businesses at all levels of the supply chains, to achieve the growth the economy needs. That means paying everyone from the largest supplier to the sole trader quicker, so they have the confidence to invest, improve productivity and grow."

Liz Barclay, The Small Business Commissioner