Late-paying construction companies suspended from Prompt Payment Code
A number of companies, including construction giants such as Balfour Beatty, Costain, and Laing O’Rourke, have had their membership of the Prompt Payment Code suspended due to consistently paying their suppliers late.
Many of the UK’s biggest construction companies were among the thousands of organisations that signed up to the Prompt Payment Code, administered by the Chartered Institute of Credit Management (CICM) on behalf of the government. They had pledged to pay 95% of all supplier invoices within 60 days.
Based on the new Payment Practices Reporting data that large businesses must publicly report, CICM is reviewing whether businesses are meeting the standards of the code and actually paying their suppliers promptly. The first phase of these reviews has identified 17 businesses to be removed or suspended, with more removals and suspensions expected in the second phase of review currently underway.
Balfour Beatty, Costain, Engie Services, Interserve Construction, Kellogg Brown & Root, Laing O’Rourke and Persimmon Homes are among 12 businesses that have been suspended from the PPC for not paying their suppliers in line with the code. A further five companies, including the tea maker Twining, have been thrown out all together for non-compliance and for not providing a plan for how they will meet the terms of the code.
CICM chief executive Philip King said: “The board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.
“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the Code.”
News of the suspensions builds on a government announcement in November, where failure of companies to demonstrate prompt payment to their suppliers could result in them being prevented from winning government contracts.
From 1st September 2019, any supplier bidding for a government contract above £5m per annum will have to answer questions about their payment performance. The expected standard is to pay 95% of invoices in 60 days across all their business. Any supplier who is unable to demonstrate that they have systems in place that are effective and ensure a fair and responsible approach to payment of their supply chain may be excluded from bidding.