New Fair Payment Code Launched

A NEW Fair Payment Code has been launched by the Office of the Small Business Commissioner (OSBC) on behalf of the Department for Business and Trade (DBT) to encourage businesses across the UK to pay promptly.

Businesses can now apply for the award tier which best suits them: Gold, Sliver or Bronze. The tiered system of awards is aimed at awarding best practice and driving improvements in payment performance. The three award tiers are:

• Gold Award – for those firms paying at least 95% of all invoices within 30 days

• Silver Award – for those paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days

• Bronze Award – for those paying at least 95% of all invoices within 60 days

In addition, every business granted an award agrees to abide by the Code’s principles of being ‘Clear, Fair and Collaborative’ with their suppliers.

New Fair Payment Code

The Fair Payment Code replaces the Prompt Payment Code. It will support businesses which wish to improve payment practices and help them move up from Bronze to Silver, and to Gold over time.

The Fair Payment Code Awards are for two years. Every business will need to reapply for their award at the end of each two-year period. There will also be a complaint system in place for businesses to highlight to the OSBC those not meeting the requirements of the category of their award (Gold, Silver or Bronze) or not following the principles of the Code.

Businesses can apply of any award level of the Fair Payment Code on the OSBC website.

Ian Cass, Managing Director at the Forum for Private Business and Chair of the Micro Business Alliance commented: “For many years we’ve been pushing for a rewrite of the Prompt Payment Code, as well as better behaviour from those who sign up to it.

“Small and micro businesses constantly live in a state of fear and perpetual jeopardy of late payments but are unable to refuse the work even if the customer is offering long and unfair payment terms or is renowned for paying late, as this is preferable to losing the client and critically impacting on cash flow. We need to challenge this culture more robustly, and the new Code is a clear indication that poor payment practices are no longer acceptable.”

Carol Daniels, Operations Director at the National Enterprise Network added: “For small and micro businesses, cash flow management while waiting for invoices to be paid is a constant worry. Many feel forced to accept long payment terms—sometimes 90 or even 120 days—out of fear of losing work. This practice needs to stop. It’s a damaging culture, pushing small firms to the brink and impacting mental health. The introduction of this new Code is a significant and much-needed step in the right direction.”

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