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Prompt Payment or Fair Payment?

Published on Friday, July 23, 2010

As reported earlier this month, Bacs have partnered with the Institute of Credit Management (ICM) in order to promote the Prompt Payment Code, launched by the ICM in 2008.

The Government has now announced plans for a ‘fair payment’ code, intended to accelerate payments to sub-contractors working on public construction projects.

The plan has been met with a degree of scepticism by Bacs and the ICM due to the fact that both codes share similar characteristics, and therefore begs the question of whether or not two are required.

Philip King, chief executive of the ICM, says: “While we welcome all initiatives designed to help address the issue of late payments, the Government’s latest plan appears to duplicate the efforts of the Prompt Payment Code, launched only two years ago.

“There are already 917 voluntary signatories to the Prompt Payment Code, 27 of which are operating in the construction industry, and our work in partnership with Bacs is set to drive this membership further.”

The Prompt Payment Code exists to promote best practice between businesses and their suppliers. It aims to reduce the days spent chasing up invoices and, ultimately, improve the cash flow cycle. All members of the code ensure their suppliers are paid on time and within the terms set out in the agreed contract.