A number of large companies, including Vodafone, Balfour Beatty and Costain, have been suspended from a voluntary punctual payment code. In total, 12 companies have been affected. This has been carried out by an organisation that works for the government.
The 12 companies are amongst 2,500 who are enrolled in the Prompt Payment Code. This code is administered by the Chartered Institute of Credit Management (CICM), which does so on behalf of the government.
For companies to comply with the code, they must pay 95% of their suppliers’ invoices within 60 days. If they fail to do so, then they risk suspension or removal from the scheme, which is voluntary.
The firms were suspended after an announcement from the government stating that organisations which fail to pay their invoices on time will not be permitted to bid for government contracts. This is due to come into force in September.
The 12 that have been suspended will now have to work with CICM to agree on a plan of action that would address issues with their payment processes.
Five more companies have been removed from the code when they continued to fail to comply with the rules.
Up until now, CICM did not name and shame companies for non-compliance.
From 1st September 2019, any company that wishes to bid for a government contract worth more than £5 million will need to answer questions on their payment performance. Any large company that has a poor payment record may be excluded from the bidding process.