The Leading News & Information Service For The Facilities, Workplace & Built Environment Community

Prompt Payment Code – Fairness in Supply Chain

15 July 2021
 

It is more important than ever that companies treat their supply chain partners fairly, especially when it comes to payment, according to the Building Engineering Services Association (BESA).

The government’s reformed Prompt Payment Code (PPC) came into force on July 1, and this should remind all contractors of their obligations to pay suppliers fully and on time, Building Engineering Services Association (BESA) said.

 

95% of Invoices Must be Paid Within 30 Days

 

Code signatories must now pay 95 per cent of invoices received from businesses with fewer than 50 employees within 30 days or risk being barred from public sector projects. Previously the allowed period was 60 days and, in addition, senior directors are now required to personally sign the code and take responsibility for payment practices throughout their organisations.

They must also formally acknowledge that suppliers are entitled to charge interest on invoices paid late.

No PPC signatories were suspended from the code during the coronavirus pandemic, but the Cabinet Office has promised to step up enforcement.

 

Late Payment

 

Late payment starves companies of working capital when they need to be investing in skills and technology,” said BESA’s director of legal and commercial Debbie Petford. “It also raises stress levels in an industry, which has been dogged by serious mental health problems for years.”

She said this issue had been a source of “fury and frustration for decades” and, despite upwards of 20 government-backed initiatives remained a fact of life for too many businesses.

“Wilfully delaying payment to fund your own cash flow is dishonest and immoral. It is even more deplorable at a time when many small firms are fighting for their lives,” added Petford.

 

The Effect on Mental Health

 

The scale of mental health issues linked to late payment was exposed by an online survey commissioned by BESA and the ECA and carried out by pollsters YouGov to coincide with Mental Health Awareness month.

It found that employees in construction SMEs were more than twice as likely to have suicidal thoughts as people employed in other sectors. Displays of extreme anger resulting from late payment are also 50 per cent more likely in SME construction firms, than in businesses of a similar size in other industries, according to YouGov.

The speed of the sector’s post-lockdown recovery seems to have added to the stress experienced by many construction SMEs because it has brought late payment to the fore again. The survey showed that extreme responses, such as suicidal thoughts, depression, and panic attacks in construction SMEs, were 6 per cent higher than in sectors experiencing a slower economic recovery.

“We welcome the government’s intervention in this area and look forward to the Code being properly policed and its measures enforced,” said Petford. “Improving cash flow through supply chains is good for everyone because it leads to increased investment in people and products as well as well-motivated and responsive workforces able to deliver better projects for clients.”

Picture: a photograph of a person sitting at a desk with a laptop and calculator 

Article written by Ella Tansley | Published 15 July 2021

Share



Related Articles

Controlling FM Costs Roundtable with JLL

CAFM company JLL Technologies is interested in the voices of leaders in the FM private and public sectors – as such, a diverse board was invited to a roundtable...

 Read Full Article
First-Ever World Ventil8 Day Launches

An awareness campaign to promote the critical role of building ventilation has been launched by a coalition of scientists, academics, engineering bodies and environmental...

 Read Full Article
In-Person BESA Conference and Awards Returns After 3 Years

This year’s Building Engineering Services Association’s conference saw its highest-ever attendance, with 270 delegates and more than 400 guests gathering at...

 Read Full Article
BESA, RICS and NBS Unite to Align on Building Data Standards

In what has been described as “a momentous game-changing moment”, RICS, BESA and NBS have created a roundtable collaboration forum, to align the data...

 Read Full Article
Actuate UK Stresses Importance of Making Building Safety Act a “Practical Piece of Legislation”

Actuate UK, who represents professional bodies such as BESA and CIBSE, says that new requirements through the Building Safety Act will need to be enforced...

 Read Full Article
Five Ways to Support Workplace Mental Health

On World Mental Health day, Alex Minett from CHAS offers five steps companies can take to make workplaces more inclusive for workers who experience mental health...

 Read Full Article
Mitie, Compass and Wates Group Among FM Firms to Support Buy Social Corporate Challenge

30 UK businesses have spent £250 million procuring services and products from social enterprises and helped create 2,700 jobs in an ongoing programme from Social...

 Read Full Article
FM Firm Supports World Suicide Prevention Day

Facilities services provider ABM, alongside other industry players, is raising awareness about suicide prevention at a London conference. Taking place on 8 September...

 Read Full Article
BESA Warns of Critical Fire Safety Issue in Ventilation Systems

The Building Engineering Services Association has issued an urgent warning about a potential fire safety weakness in a large number of building ventilation...

 Read Full Article
Spotlight Interview – Helen Carter | Action Sustainability – Modern Slavery in FM

Modern slavery and forced labour have a huge presence within facilities management, its supply chain and the wider built environment. ThisWeekinFM spoke to Helen...

 Read Full Article