Member Article

The Office of the Small Business Commissioner has announced the New Fair Payment Code. This is now open for businesses to apply to the new Code and it replaces the Prompt Payment Code which was introduced in 2015.

Following on from our article on Payment Terms in Supply Chains (Payment Terms – what are the current rules and those coming down the track), we now have clarity on what is included in the new Fair Payment Code. The Code introduces different award levels and businesses can now apply for the award tier which best suits them. The award tiers are as follows:

• Gold Award – for those firms paying at least 95% of all invoices within 30 days
• Silver Award – for those paying at least 95% of all invoices within 60 days, including at least 95% of invoices to small businesses within 30 days
• Bronze Award – for those paying at least 95% of all invoices within 60 days

Fair Payment Code Awards are for 2 years, after which businesses will need to re-apply for an award. Businesses granted an award also need to abide by the principles of being Clear, Fair and Collaborative with their suppliers. The Office of the Small Business Commissioner will institute a robust complaint system for failing to comply with the principles or the requirements of the category of award signed up to.

In conclusion, it is notable that the Gold tier of the award aligns with the Procurement Act due to enter into force in February 2025 which mandates that all public procurement contracts include a 30 day payment term. Whilst the new Code is voluntary, it clearly demonstrates the Government’s commitment to eradicating poor payment practices.

 

Link to article