Late-paying construction companies suspended from Prompt Payment Code

Many of the UK’s biggest construction companies were among the thousands of organisations that signed up to the Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM) on behalf of the government. They had pledged to pay 95% of all supplier invoices within 60 days.

But a lot of them have either failed... or simply just lied.

Based on the new Payment Practices Reporting data that large businesses must publicly report, CICM is reviewing whether businesses are meeting the standards of the code and actually paying their suppliers promptly. The first phase of these reviews has identified 17 businesses to be removed or suspended, with more removals and suspensions expected in the second phase of review currently underway.

Five companies, including John Sisk & Son, have been thrown out altogether for non-compliance and not providing a plan for how they will meet the terms of the code. The others are BHP Billiton, DHL, GKN Plc and tea maker Twining.

Balfour Beatty, Costain, Engie Services, Interserve Construction, Kellogg Brown & Root, Laing O’Rourke and Persimmon Homes are among 12 businesses that have been suspended from the PPC for not paying their suppliers in line with the code. They have been suspended, rather than expelled at this stage, because they have promised to change.

Other companies in this category of include Atos IT Services, British Sugar UK, Rolls-Royce, SSE and Vodafone.

Businesses suspended from the PPC are invited to produce an action plan setting out how they will achieve compliance with the code within an agreed period. When they have achieved compliance their status as a code signatory will be reinstated. If they do not, then they will be removed.

CICM chief executive Philip King said: “The board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.

“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the Code.”

News of the suspensions builds on a government announcement in November, where failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts.

From 1^st September 2019, any supplier bidding for a government contract above £5m per annum will have to answer questions about their payment performance. The expected standard is to pay 95% of invoices in 60 days across all their business. Any supplier who is unable to demonstrate that they have systems in place that are effective and ensure a fair and responsible approach to payment of their supply chain may be excluded from bidding.

Kelly Tolhurst, minister for small business said: “The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain. We remain committed to supporting small businesses against poor payment practice and are delighted to see that the Prompt Payment Code Compliance Board has acted to expose those whose payment practices fall outside of their obligations to treat suppliers fairly.”

There are plenty of other repeat offenders that have not been sanctioned by the Prompt Payment Code at this stage, as data collated by the Build UK trade association reveals. NG Bailey, Arup, Kier, Murphy and Wates all pay most of the suppliers late and thus can expect to be miss out on government contracts unless they sort themselves out pretty swiftly.

Source Build UK: https://builduk.org/priorities/improving-business-performance/duty-to-report/table/

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