GlaxoSmithKline (GSK) has been reinstated on the government-backed prompt payment code list after it failed to pay back invoices years ago.
Previously, GSK was only paying 28 percent of its suppliers within 60 days in its consumer healthcare division and only 12 percent from the overall U.K. business. According to the Small Business Commissioner, the average small and medium supplier is paid within 18 days.
But the company has reportedly turned things around and is abiding by the new government rules, which now say large companies must make payments to smaller suppliers in 30 days rather than the previous rate of 60.
“It’s encouraging to see that GlaxoSmithKline recognises the value of being a signatory to the code, and as a result have put in the hard work to improve their payment practices,” U.K. Small Business Commissioner Liz Barclay said. “Since the Small Business Commissioner took on [the] administration of the code in March 2020, we have seen more than 1,126 new signatories.”
Barclay added that she “urge[s] all businesses to demonstrate their commitment to ethical payment practices and become signatories to the code.”
John Foster, campaign director with the Confederation of British Industry, said the COVID-19 pandemic had “highlighted the importance of healthy supply chains.”
Foster said smaller businesses “are the backbone of the UK economy yet remain most at risk from slow or late payments, particularly after months of cashflow pressure.”
Meanwhile, just days ago, it came out that Tesco resigned from the code in June, right before the tighter rules were introduced.
Recent studies found that around 50,000 small U.K. companies close every year because of late payments. Overdue invoices for SMBs totaled $30 billion in 2020.
The U.K. government has made efforts to combat late business payments, including the aforementioned Prompt Payment Code. It was introduced as a voluntary way for large enterprises to promise timely payments. But Chaser CEO Sonia Dorais told PYMNTS many companies may not even know they’ve missed a payment — many times, it could come down to small tasks such as forgetting to enter new card details or similarly mundane tasks.