The new Fair Payment Code (FPC) – Will you be going for Gold?

The Office of the Small Business Commissioner (OSBC) has created the new Fair Payment Code (FPC) to encourage businesses across the UK to pay within terms.

The OSBC is an independent public body set up by the government under the Enterprise Act 2016 to tackle late payments and damaging payment practices in the private sector.

The code is aimed for businesses of all sizes, looking to improve their payment processes. The FPC has been designed to promote prompt payments through a tier-based award system.

The FPC replaces the old Prompt Payment Code in a bid to provide a more ambitious, aspirational, and robust approach to payment processes.

The new Code encourages businesses across the UK to pay promptly and attain an award in the process (whilst also working towards bettering their payment practices and in turn gaining the next award).

Businesses can aim for bronze, silver, or gold.

Bronze Award: This is for those paying at least 95% of all invoices within 60 days.

Silver Award: This is for businesses paying at least 95% of all invoices within 60 days (including 95% of small business invoices within 30 days).

Gold Award: This is for firms paying at least 95% of ALL invoices within 30 days.

The FPC also provides support to businesses who wish to improve payment practices. If a business starts this process on Bronze, the FPC will be there to guide them to move up to Silver, and eventually Gold.

Once a business applies for an award, they must agree to abide by the Fair Payment Code’s principles. As awardees, businesses must be Clear, Fair, and Collaborative with their suppliers. Remaining communicative with suppliers will also create stronger connections and strengthen

It’s vital for a business to have a healthy cash flow. Businesses who are dealing with regular late payments are also facing disruptions in their cash flow cycle which can cause a whole array of issues.

From being unable to pay bills to staff wages and all the way to subsequent closure and failure of the business, late payments (and in some cases, refusal of payments) can make a huge impact on a business’s wellbeing.

Businesses who sign up to be a part of the Code will be listed amongst their catalogue of Fair Payment Code awardees. However, once they apply, they will need to stay on top of their payment processes. To keep your award (or go up an award), a business will need to reapply every two years. This allows businesses to remain accountable for their payment practices regularly.

On top of their regular reapplication process, the OSBC also has a robust complaint system set in place for awardees. Other businesses can highlight if they are not meeting the necessary requirements of their award or not following the principle of the Code. You can contact the OSBC directly for this.

Visons and Missions

The OSBC’s vision is to create an environment where overdue payments to small businesses rarely exist. They would like to see the practice of suppliers being paid within 30 days to be the standard as well as extended payment terms and unfair payment practices not being the norm.

Their mission is to support small businesses get paid on time and encourage larger businesses to minimise their payment times for suppliers and work with businesses across the UK to improve the culture of payment practices.

Overall, the objectives of the Office of Small Business Commissioner’s include:

• Improving large businesses understanding and approach to payments- Improving small business capabilities

• Raising awareness and providing access to support for businesses who want to improve their payment practices-Increasing digital adoption

  
  

If you’re interested in signing up to the Fair Payment Code and applying for an award, you can contact the OSBC directly. Applications are open from September to December each year and businesses are awarded for the following two calendar years.

Credit control is a holistic process. If you’re having issues paying suppliers, you’re probably also having problems getting your own invoice. The cash isn’t flowing!

Drop us a call on 01209 823118. We’d love to help you get your invoices paid and in turn, get your suppliers paid.