The Prompt Payment Code

Could this latest review of the late payment culture, for businesses in the UK, at last prompt change?

The government announced back in January that it was going to review and adjust its Prompt Payment Code (PPC). This reform could see credit and payment terms reduced from over 60 and 90 days to around 30 days for SMEs.  Figures recently published showed that there was a shocking £23.4bn of late and outstanding invoices owed to UK companies.  This in turn has a further knock on effect, causing late payments to their suppliers, with the sobering facts of this being that over 50,000 business close every year said the Federation of Small Business.

The PPC was introduced, in the hope, that it would clamp down on poor payment practices and offer the lifeline that SMEs were looking for, to aid their cash flow.  It came in to force in July 2021 but still, one year later, it only has just over 3,000 businesses signed up to the voluntary code.

New data also reveals that over 70% of SME businesses suffer extreme late payments from their customers to show the true severity and scale of the issue.

The Prompt Payment Code isn’t sadly enforceable currently and businesses continue to seek alternative solutions to the issue that so many are facing.  Bank overdrafts were the original cashflow cure for SMEs but this product is a good as finished, thanks to Bank regulation. However Invoice Finance is now recognised as a growing and valuable solution for SME owners to consider as this allows them to release cash tied up in their unpaid invoices, until they are paid by their customers, thereby relieving the inevitable pressure on cashflow, which then allows them to reinvest and grow.

FlexABL see this issue on a daily basis and are working closely with a growing number of companies, to enable them to release cash from their unpaid invoices via innovative and, of course, flexible asset-based lending facilities.

A client, with a confidential facility in the plant hire sector said “I would highly recommend FlexABL. We are a small company and find them professional and very helpful, the transfer over to FlexABL was smooth and did not affect the running of the business in any way. The online system is clear and user friendly, with full support at all times.”

If you would like to speak with one of the team to see how we might be able to help with your daily cashflow conundrums please do give us a call on 0333 123 1111 or apply here