Late Payments
Debate between Viscount Younger of Leckie and Baroness McDonagh
Baroness McDonagh (Lab)
I ask the Minister for a little more information about the definition of late payments. Small businesses often experience difficulty in the process that leads up to issuing an invoice, such as delays in purchase order numbers or complexity around who to send the invoice to. When I speak to small businesses, they often say they have lost months trying to get through that maze before they can even issue the invoice to the right person. I just want a little more information about how late payments are defined. Some organisations almost have a PhD in this now.
Viscount Younger of Leckie
Yes, the noble Baroness can be forgiven for thinking that. I hope I can give a succinct answer, again differentiating between private and public enterprise. Just to clarify, the Prompt Payment Code—which is voluntary, as I have mentioned—is administered by the CICM. Signatories to the code sign up to pay 95% of invoices in 60 days, with an ambition to move towards 30-day payment terms. The code currently has over 2,000 signatories. However, on the public side the payment terms are 30 days. It could well be the case that, depending on the contractual agreement between the two companies, a different arrangement can be made. If both sides are happy with that separate arrangement, that is fine, but I am talking about the default—we lay out the framework and that gives the default. I hope that gives the noble Baroness a basic answer to the question.