Just as you expect others to pay you on time, it's just as important that you pay your bills on time.
Effects of not paying on time
Not paying on time could:
- damage your reputation
- strain relationships with suppliers, who could impose less favourable terms for future transactions
- give the impression that you have financial difficulties
- restrict the growth of the supplier's business and the economy as a whole
Benefits of paying on time
A commitment to paying on time may:
- aid your relationship with suppliers
- enable you to negotiate better deals
To promote good payment practice, you should:
- agree terms of payment at the outset
- monitor your payment system - ensure it's flexible enough to meet any different payment terms agreed with suppliers
- pay undisputed bills by their due date
- foster good relations with clients - give them name(s) of critical payment staff and tell them how your payment system works
You could also put together a payment policy that:
- includes clear instructions on payment of bills
- can be made available to suppliers upon request
All appropriate staff should be notified of the policy, which should be reviewed regularly.
Prompt Payment Code
The Prompt Payment Code (PPC) is a joint initiative of the Chartered Institute of Credit Management (CICM) and the Department for Business, Energy & Industrial Strategy (BEIS) to help tackle late payment. Businesses that sign up to the code commit to paying their suppliers on time and to providing clear guidance on payment procedures.
The code is endorsed by several major banks and business organisations. Businesses that have successfully signed up to the code are allowed to display the PPC logo.