So the Prompt Payment Code received some negative press at the weekend - described as 'nothing more than window dressing' and 'complete nonsense'. The ICM administers the Code on behalf of BIS and so you'd expect me to react to such comments.
Firstly, I wish the FT had asked the ICM for a view. Since we administer it, we are better placed to comment than people who have never even heard of it.
Secondly, I find it frustrating when the point is so obviously missed. The Code aims to ensure that the terms and conditions agreed between two parties are adhered to. It is NOT about whether the agreed payment terms are 30, 60 or 90 days; that is a complete red herring. What is critical to small businesses, and indeed any business, is the certainty of payment. It is this certainty that allows businesses to manage their cashflow accordingly.
I agree that the Code needs to be better promoted, and lack of compulsion is a real issue, but it should be remembered that the PPC was one of a range of initiatives launched by BERR (now BIS) in partnership with the ICM including a series of Managing Cashflow Guides of which there have now been more than 225,000 downloads.
What's equally frustrating is the lack of recognition that the real requirement is for good credit management across the whole sales life cycle from beginning to end. The challenges we have received about Code signatories almost without exception display an element of basic credit management practice being missed - order number not being quoted or terms not being agreed in advance for example. Large businesses exploiting smaller suppliers is abhorrent but those smaller businesses need to recognise their own complicity in creating the very circumstances about which they complain.
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