Late payments are a major obstacle for small businesses, with 15% of SMEs citing cash flow challenges due to delayed payments in 2023. To tackle this, the UK government has introduced the Fair Payment Code, a transformative initiative aimed at promoting timely payments and supporting small business growth.
What Is the Fair Payment Code?
Replacing the Prompt Payment Code, the Fair Payment Code introduces a tiered award system—Gold, Silver, and Bronze—to encourage businesses to adopt best practices in payment performance. These awards recognise companies that are committed to paying their suppliers on time and maintaining transparency in their payment processes.
- Gold Award: For businesses paying at least 95% of invoices within 30 days.
- Silver Award: For businesses paying 95% of invoices within 60 days, with small business invoices paid within 30 days.
- Bronze Award: For businesses paying 95% of invoices within 60 days.
Award holders must also follow the Code’s principles of being Clear, Fair, and Collaborative with suppliers. Awards are valid for two years and must be renewed to ensure continued compliance.
Why the Fair Payment Code Matters
Healthy cash flow is essential for small business success. Late payments disrupt operations, create financial stress, and can even lead to failure. The Fair Payment Code aims to:
- Promote faster payment times, with a goal of 30-day terms becoming the norm.
- Reduce the use of lengthy, damaging payment terms in contracts.
- Foster better collaboration across all business sizes.
The initiative also introduces a robust complaint system to ensure businesses uphold their commitments and adhere to the Code’s standards.
How Your Business Can Benefit
By adopting the Fair Payment Code, your business can:
- Showcase your commitment to fair and transparent payment practices.
- Improve supplier relationships and strengthen your supply chain.
- Contribute to creating a more equitable business environment for all.
Get Involved Today
Any business can apply for an award that reflects its current payment practices. By participating, you’ll join a movement to improve payment culture across the UK, making a real difference for small businesses everywhere.
Learn more about the Fair Payment Code and how it can benefit your business at Fair Payment Code – Small Business Commissioner
