Last month the government’s Construction Leadership Council published a new payment charter for the construction supply chain.
Signatories to the new Construction Supply Chain Payment Charter (CSCPC) will ensure that payments are made to their supply chain not more than 45 calendar days from the end of the calendar month in which the work is carried out or products are supplied. From January 2018 that will decrease to not more than 30 days. To date there are 22 such signatories listed on the CSCPC website.
Organisations that sign up will refer to a different set of payment commitments to the Prompt Payment Code. They can also use the CSCPC logo to show ‘they are serious about good payment practice’.
By becoming a signatory to this Charter, an organisation agrees to apply the fair payment commitments in its dealings with its supply chain, to be monitored for the purposes of compliance by reporting against a set of agreed KPIs, and to consider the performance of its supply chain against the agreed KPIs when awarding contracts.
In order to be able to sign the charter, an organisation must first be a signatory to the Prompt Payment Code (PPC), which is administered by the CICM (Chartered Institute of Credit Management) on behalf of the Department for Business, Energy and Industrial Strategy (BEIS) and sets standards for payment practices and best practice.
Experian defines Days Beyond Terms (DBT) as the number of days, on average, that a company pays its invoices after payment has become due. This data is collated from sales ledgers, supplied to them on a monthly basis and updated daily to show up to date actual payment behaviour. A quick look at a sample of experiences reported against Tesco in August showed 74 cases of debts of 110 days beyond term in an industry, according to Experian, which averages 30 days beyond term. Experian’s research found that the UK’s smallest businesses were tackling overdue invoices much faster than the corporate giants.
