Although there is UK and European legislation in place, late payment is still a problem faced by many suppliers and the prime Minister has announced a consultation will take place this year to question how responsibility for payment can be addressed by senior management; how the government’s own Prompt Payment Code can be strengthened; and how vendors can be encouraged to exercise their right to interest on late payments.
“It’s not right that suppliers are not getting paid on time for the work they do and the services they provide and I know that late payment can have devastating effects on our small and medium-sized businesses,” the Prime Minster said. “The government has already taken steps to help address this issue but I am clear that more needs to be done to build a business culture across all sectors of the economy that sees the fair, prompt and reliable payment of suppliers become a core corporate responsibility which is taken seriously at the most senior levels.”
Without wanting to second guess the outcome of the consultation, further legislation would not be the answer. A cultural change within organisations is a key to the solution and needs to form part of corporate responsibility, as this will help promote sustainability within supply chains.