Construction minister Michael Fallon sends out warning letter
Construction minister Michael Fallon has warned he will name and shame contractors that fail to sign up to the government’s Prompt Payment Code.
Fallon has written to all FTSE 100 and FTSE 250 companies urging them to sign up to the charter.
Several FTSE-listed construction firms have so far signed up to the code – including Balfour Beatty, Skanska and Miller – but others such as Galliford Try, Kier and Interserve have not yet done so.
Fallon said: “Late payment causes real cashflow problems for entrepreneurs. It stops them from growing their business - we need to change the culture.
“Too many of our biggest companies are ignoring the Prompt Payment Code. My message to them is clear: make prompt payment a priority or face the consequences of being named.
“I’m confident that driving up support for the common-sense principles in the code will have a very positive effect.”
Currently 1,182 companies are signed up to the Prompt Payment Code, but only 27 FTSE 100 firms and five FTSE 250 companies are signatories.
Government is advising businesses to:
- Agree payment terms before delivering orders.
- Make use of Supply Chain Finance schemes, which allow banks to offer loans to businesses when an invoice has been approved from the supplier.
- Raise complaints through legal channels over late payment from Prompt Payment Code signatories and use legislation already in place to help companies pursue late payers and seek the relevant compensation available.
- Use electronic invoicing where possible, automating processes and adding instant transfer of the invoice and instant verification from the customer that the invoice has been received.
- Use Get Paid!, a guide for small businesses which contains tips and advice from both suppliers and customers published by the Association of Chartered Certified Accountants.