By Claire West
Following a high profile campaign which invited the 75 top 100 FTSE companies who weren’t already signed up to the Institute of Credit Management’s Prompt Payment Code to do so 10 have.
The Be Fair - Pay on Time campaign fronted and co-signed by Debbie Abrahams, MP for Oldham East and Saddleworth; the Institute of Credit Management (ICM); the Federation of Small Businesses (FSB) and the Forum of Private Business (FPB) sent out letters to the 75 FTSE companies on 6th July with a 31st August deadline for a response.
Out of the 75 companies that received the letter:
4 said they would not sign the code
1 sent a holding letter that was never followed up
60 did not respond
But, encouragingly, 10 companies have signed up.
The 10 that have signed the PPC are:
BG Energy Holdings - Their business is the discovery, extraction, transmission, distribution and supply of natural gas to existing and developing markets around the world - www.bg-group.com
BHP Billiton - The world’s largest diversified natural resources company. Their objective is…the discovery, acquisition, development and marketing of natural resources - www.bhpbilliton.com
Reckitt Benckiser — a global company that have many well-known brands of household and health products - www.rb.com
Royal Dutch Shell - a global group of energy and petrochemicals companies with around 90,000 employees in more than 80 countries and territories.
Serco — An international company involved in areas of public service, including health, education, transport, science and defence - www.serco.com
Standard Life - Around 6 million customers worldwide use Standard Life. They manage £206 billion of assets (as at 31 March 2012) - www.standardlife.co.uk
Vodafone Group Services Ltd - More than 404 million people use Vodafone. In 25 years, a small mobile operator in Newbury has grown into a global business - www.vodafone.com
Land Securities Properties — The largest commercial property company in the UK. Founded in 1944, they now own and manage more than 29 million sq ft of property, from shopping centres to offices.
Severn Trent plc - Provides and treats water and waste water in the UK, and internationally, through two main businesses — Severn Trent Water and Severn Trent Services
Tullow Group Services Ltd - Tullow Oil plc is a leading independent oil & gas, exploration and production group.
Debbie Abrahams, MP for Oldham East and Saddleworth, said: “Firstly we should give credit where it’s due to the ten global companies who have agreed to sign up to the Prompt Payment Code.
“They are prepared to lead by example and demonstrate their commitment to help SMEs across the UK with prompt payments right along their supply chain.
“Whilst all ten are confident that they already meet, or even surpass, the code’s criteria this is more about them showing leadership in the business world. Showing they are prepared to say publically what is acceptable business practice and to be held accountable for this.
“They are demonstrating that they recognise the importance of paying their bills to their suppliers on time and how their actions affect the thousands of hardworking SMEs across the UK who are currently owed £33B in late payments.
“To those companies who responded but said, as a global company, they didn’t feel it necessary to sign up to the voluntary code I say they are simply demonstrating their lack of empathy for SMEs and their lack of understanding of how unacceptable their behaviour is. It’s indicative of a selfish ‘I’m alright Jack’ attitude that should not be tolerated.
“The fact that they are global companies is no excuse and just doesn’t wash especially as the ten who are signing up are all international companies too.
“These companies say they are already paying their suppliers promptly anyway in which case I say ‘Stand up and be counted!’; show some leadership and do what is right!
“The other sixty top FTSE companies, who didn’t even bother to respond to a letter from the UK’s leading organisations representing SMEs, and me, should take a long, close look at the impression this gives of them.
“Like the bankers, who are paid huge bonuses, or tax evaders, who see nothing wrong with their behaviour, the bosses of these huge multi-national companies seem to be happy to give the impression that they live in another world.
“The public will begin to wonder just how far removed from the rest of society the people who control these huge companies are.
“We’ll continue to challenge these huge companies and will be contacting them all again to challenge their attitude and to ask them to show support for our SMEs so the Be Fair —Pay on Time campaign is far from over!”
Philip King, Chief Executive of the Institute of Credit Management (ICM) said: “Good credit management releases cash that is already sitting in a business, thereby reducing the need for further funding. And at the heart of good credit management is prompt payment.
“While we welcome any improvement in payment performance and commitment from big business to address the speed with which they pay their suppliers, payments that are 30 days overdue can have a dramatic impact on struggling businesses within the supply chain, leaving a big cashflow 'hole' that needs to be filled.
“Industry and business need to understand the importance and advantages of paying on time to ensure the supply chain remains strong, and services are sustained. Paying on time to agreed terms should be the norm rather than the exception.”
John Walker, National Chairman, Federation of Small Businesses, said: “It is good news that ten of the biggest companies in the UK have signed up to the campaign. We now need to see more following their example.
“Too many businesses struggle with their cash-flow because of late payments and it’s time for this to stop. It just isn’t fair that small firms struggle because bigger businesses take too long to pay. I want to see all big businesses committing to being fair and paying on time.”
Alex Jackman, Senior Policy Adviser of the Forum of Private Business, said: “For companies on the scale of Royal Dutch Shell to sign up to the Code is just tremendous and sends out an excellent message — and that’s true for all those FTSE listed firms who’ve done likewise.
“However, for so few of the country’s top 100 companies to subscribe is really disappointing. The PPC is simply a commitment to be supply chain friendly, and also an indication of a business to be prompt payment ethical.
“We can’t understand why some companies feel this is something that’s beneath them, or something they can’t commit to. That said, it’s never too late to sign up, and that goes for all firms, whatever their size.”
Chuka Umunna, Shadow Business Secretary, said: "Late payment is a huge and growing problem for our small and medium sized businesses. I applaud Debbie's campaign which has pushed for FTSE 100 companies to be fair and pay on time.
“It is fantastic that as a result of the campaign ten more large firms are now signed up to the prompt payment code. We want even more companies to follow their lead. There is no excuse for not paying on time, which has led to too many small companies going under.”