BUSINESSES are scathing about the government’s Prompt Payment Code scheme, with opinion split between those firms who believe it is ineffective and those who have not heard of it.
The voluntary system is designed to combat late payments to firms, and attempts to encourage payments within 30 days for public sector contracts. The period for business-to-business payments is 60 days unless otherwise agreed.
However, 72 per cent of firms surveyed by software providers Sage say they have waited more than 60 days for payments, and 57 per cent say payments have been delayed by more than three months.
Barely any businesses refer to the code as effective or very effective, with only five per cent of respondents approving of the scheme, while 54 per cent say it is ineffective or very ineffective. The remaining 41 per cent have not even heard of the scheme.
“There has been plenty of rhetoric, but not enough action and firms are saying they are fed up,” commented Sage’s Lee Perkins, who described the existing system as “toothless and ineffective”.
With late payments common, the research also suggests that 14 per cent of firms cannot pay their own suppliers because of late payments, sending the effect on further down the supply chain to other companies.