Paying suppliers promptly
–Everyone wins!
Mark Coster
Founder of Pixooma
As any small business knows, cash flow is everything. That’s why I’ve always been a stickler for paying our suppliers within the credit limits they specify and also ensuring that we are paid by our clients on time. Such was my belief in these behaviours that years ago I signed Pixooma up to the Prompt Payment Code which independently monitored us to ensure that we paid our invoices promptly.
In late 2024, the Prompt Payment Code became defunct and was replaced by the Fair Payment Code – a nationally recognised payment quality standard for businesses. Earlier this year we applied and were keen to aim for the highest level of recognition - gold!
…shouldn’t we be treating others as we would wish to be treated ourselves?
Going for Gold
To achieve gold status, we had to show that we paid at least 95% of our supplier invoices within 30 days. In reality, though, we never pay any invoice anywhere near that late. All invoices we receive are paid as quickly as we are able - often the same day or in just a few days (even if we haven't been paid ourselves yet), and always well within the supplier's terms of business. This means that, other than a couple of genuine mistakes over the last 11 years, no supplier waits anywhere close to 30 days for our payments.
And last month, we were delighted to be awarded gold status. We will need to apply again next year as the gold status is only valid for one year.
What is the Fair Payment Code?
The Fair Payment Code is a voluntary code of practice in the UK designed to improve payment practices between businesses and their suppliers. It encourages businesses to pay suppliers on time, provide clear guidance on payment procedures, and promote good payment practices throughout their supply chains. The code is administered by the Office of the Small Business Commissioner on behalf of the Department for Business and Trade (DBT).
Benefits of paying suppliers promptly
Whilst voluntary, the Prompt Payment Code is a significant initiative to combat late payments and support business growth, but what drew me to it were the other benefits:
Treating suppliers fairly
Now, I know from a cash-flow perspective that we should get our customers to pay early and pay our suppliers as late as possible because this maximises the reserves we have. BUT being nice and fair to other small businesses surely trumps this principle. After all, shouldn’t we be treating others as we would wish to be treated ourselves? Because as we know, small businesses can be most adversely affected by overdue payments, so by paying our suppliers promptly, surely everyone 'wins'?
How promptly do you pay your suppliers, and could you do more to help others and potentially your own business too. If you want to find out more about how the Prompt Business Code can help you to maximise cash-flow in your business and that of your suppliers, please get in touch, or take a look at the Fair Payment Code for yourself.
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