What does the Prompt Payment Code mean for my small business?
The Prompt Payment Code (PPC) can be a real game-changer for small businesses. It’s a voluntary scheme designed to promote fair and timely payments between businesses.
When a client signs up for the PPC, they’re agreeing to pay their suppliers on time, which generally means within 30 days. For small businesses in particular this can make a huge difference to cash flow, helping you avoid the stress of chasing late payments and making it easier to plan and budget. Knowing that a client has committed to these standards can give you extra confidence when working with them.
The PPC isn’t just about getting paid on time though. It also encourages clear and transparent payment terms. This means both parties should understand when payment is due and what happens if there’s a delay.
Being upfront with your payment terms and encouraging clients to do the same can lead to smoother transactions (not to mention better relationships!) If a client has signed the PPC, it should indicate they take their financial responsibilities seriously.
If a client hasn’t paid on time, you can use the PPC as a gentle reminder of their commitment. While it’s not legally binding, it does carry some weight, and many businesses take it seriously because they want to maintain their reputation. If the client still doesn’t pay, you can report them to the PPC, which can encourage them to act more quickly.
You can find out more about the Prompt Payment Code on the Small Business Commissioner website.