UK launches "Fair Pay, Fair Play" campaign

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UK'sFederation Of Business (FSB) has launched a campaign called "Fair Pay, Fair Play" to attempt to curb the culture of late payments in the country.

FSB research shows that about 84% of small firms reported being paid late, with 33% saying at least one in four payments they are owed arrived later than agreed. Nine out of 10 public sector suppliers said they have been paid late.

The federation presented three new reforms that it thinks will set a path towards the end of a poor payments culture.

1. Enlist help from the top. The FSB recommends giving a company's non-executive director the responsibility of chairing a supply chain committee or including supplier relationships in the audit committee. He or she would be required to provide a summary of their activity for the company’s annual report.
2. Making the Prompt Payment Code mandatory for all FTSE 350 companies, and allowing the government to fine companies that do not report data on their payment practices. The Small Business Commissioner should also be given the ability to undertake mystery shopper investigations into the payment practices of large firms including verifying duty to report on payment practice data and investigating supply chain bullying.
3. FSB wants companies to adopt project bank accounts as the default choice for major procurement projects, with proper parliamentary oversight to ensure accountability. Project bank accounts are bank accounts from which payments are made directly by the client to all parties in the supply chain. The use of project bank accounts would ensure that small public sector suppliers are being paid promptly after completing their work.

FSB chairman Mike Cherry said: "These reforms are not the silver bullet that will suddenly signal the end of poor payment practices but are certainly important and necessary steps towards this."

The federation is calling all politicians and big businesses to back these reforms and show that they believe in fair pay and fair play.

Cherry said: “Poor payment practices are not limited to the private sector and they stunt job growth and damage economic growth. At the heart of this scandal, however, lies a more important question about fairness and what is morally right."

“Why do we find ourselves in a situation where some think it is acceptable and fair to not pay our small businesses on time? The truth is that it isn’t fair, everyone deserves to be paid on time."

Poor payment culture has led to small businesses taking drastic steps such as turning to personal credit cards and overdrafts to survive while waiting for payment. But some do not survive this wait.

We think businesses should not have to turn to loans to tide themselves over until they get paid.

Do you think of FSB's recommended reforms will reduce delayed payments to small companies? Comment below or at our Facebook page.