Rolls-Royce named and shamed over late supplier payments

Rolls-Royce is one of a number of major UK companies that has been called out over late payments to supply chain companies.

It was one of the companies that agreed to the Prompt Payment Code, which stipulates that signatories are to pay 95% of all supplier invoices within 60 days. This was intended to give SMEs a more level playing field when it came to payments from major companies on which they rely for business.

The government also announced in November 2018 that the failure of companies to demonstrate prompt supplier payments could result in them being prevented from winning government contracts.

It said that from 1 September 2019, any supplier who bids for a government contract above £5m per year will be required to answer questions about their payment practices and performance, and may be excluded from bidding if it cannot be proven that they are reliable in paying companies in their supply chain. The expected standard is that stipulated in the PPC.

17 companies in total have been listed and either removed or suspended from the code. They were named and shamed by the Chartered Institute of Credit Management, which enforces and monitors signatories of the code.

BHP Billiton, logistics business DHL, Redditch aerospace and automotive business GKN plc, construction company John Sisk & Son and tea and coffee company Twinings have been removed from the code completely for non-compliance and failing to provide a plan on how they aim to meet the terms of the code.

The Go-Ahead Group Plc, a passenger transport provider, has been re-instated to the Code after filing data to show that it has been paying 95% of all invoices within 60 days for the last reported period. Go-Ahead Group has also provided the Prompt Payment Code Compliance Board with assurance that it will continue to honour both the spirit and the mandatory requirements of the Code going forward.

12 businesses have been suspended from the PPC, for not paying their suppliers in line with the Code. However they have committed to make changes to meet the standards of the Code and pay suppliers promptly. They are:

Atos IT Services UK&I
Balfour Beatty Plc
British Sugar UK – which has sites in Wissington and Newark
Engie Services
Interserve Construction
Kellogg Brown & Root
Laing O’Rourke
Persimmon Homes
Rolls-Royce Plc

The CICM said these companies were attempting to rectify the situation and get up to code. Interserve agreed an action plan which has seen the business reduce the number of payments over 60 days by 10% over the second half of last year

CICM’s chief executive Philip King said: “The board is disappointed with the actions of a minority who continue to treat their suppliers unfairly, and has no satisfaction in having to name them publicly.

“As part of our work driving culture change to end late payments, we will continue to challenge signatories to the Code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant with the Code.”

Kelly Tolhurst, Minister for Small Business said: “The Prompt Payment Code is a positive force for good and by naming transgressors we are supporting small businesses in the supply chain.

“We remain committed to supporting small businesses against poor payment practice and are delighted to see that the Prompt Payment Code Compliance Board has acted to expose those whose payment practices fall outside of their obligations to treat suppliers fairly.”