68 The launch of the Fair Payment Code (FPC) is an important element of the late payments package that should transform payment practices for UK small businesses. For years, late payments have been a drain on resources and forced an estimated 50,000 small firms to close their doors each year. Tackling this issue head-on is essential for ensuring the survival of small businesses, which make up 99 per cent of the UK’s business community. DESERVED RECOGNITION The new FPC is the aspirational part of the package, for UK corporates doing the right thing, who deserve recognition for it. A huge improvement on the Prompt Payment Code, it sets a clear benchmark for what it means to support and value small businesses through responsible payment practices – encapsulated in its gold tier. The Code’s tiers – gold, silver, and bronze – help businesses improve payments to small suppliers, aiming for 95 per cent of invoices paid in 30 days. It’s simple: invoices are either on time or late. Many pay faster, and we celebrate them too. One of the best features is a two-year sunset, which means firms need to reassess and recommit, in order to remain in the scheme. Having this designed at the outset prevents firms lingering on a code. We are proud to have worked hard with the Department for Business and Trade and the Small Business Commissioner on this, and on the Board of the Prompt Payment Code. BE CLEAR AND CONSISTENT Our advice to small firms is to be clear and consistent with your own terms. Build strong relationships by communicating openly with clients and suppliers. For those at the receiving end of poor payment practices, the new FPC provides a framework to demand better. There is so much more to come in the late payments package to tackle poor performers, but we believe the Code is an excellent and important start. We need to change the culture in the UK where it is for some reason acceptable to pay small businesses late. As one of several measures we’ve championed to end late and poor payment practices for good, we hope this is a turning point. Julie Lilley, Chief Executive of the Federation of Small Businesses, shares more about the launch of the Fair Payment Code, which aims to transform payment practices A TURNING POINT ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
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