UK Prompt Payment Code Hypocrisy

Written by admin on April 10th, 2011

It is a well known fact that cash flow problems are to businesses, what heart disease is to public health.

Heart disease is the UK’s biggest killer and rightly so it has received much publicity and government support so it was encouraging to learn back in 2008 the that government were introducing the Prompt Payment Code to tackle the biggest killer of UK business, namely cash flow difficulties, and the incidence of late payments as a direct cause.

The Prompt Payment Code sought to redress the balance in respect of UK SME’s seemingly held at the mercy of other businesses and when they eventually paid outstanding and overdue invoices. Currently, UK businesses have invoices worth £15.7 billion more than 120 days in arrears and late payments are thought to effect 75% of all small businesses.

So, how are things two years on and an economic meltdown thrown in for good measure?

Whilst many businesses have signed up, there is much work to do, but perhaps the most interesting fact to learn is that two years on, a significant number of UK councils are still not signed up to the scheme?

If late payments are such a big killer of UK businesses it begs the question, why don’t they practice what they preach?

When you factor in that UK businesses have to pay Corporation Tax, VAT and employers N.I on time, or could face a winding up order, it seems a little hypocritical that whilst the government expects its monies owed on time, has a Prompt Payment Code to promote better payments amongst businesses, but then chooses not to fully subscribe to the scheme itself?

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