As has been the case for years, the U.K. serves as the main stage for the fight against late B2B payments in this week’s B2B Data Digest. More stringent efforts of the nation’s Prompt Payment Code have caused a shakeup, while in South Africa, a treasury report blasts government entities for failing to pay suppliers more quickly too. Plus, new allegations of delayed supplier payments from a Chinese construction conglomerate.
8 national government departments in South Africa pay their supplier invoices within 30 days, according to the latest figures from the National Treasury. Its assessment of the 2020/2021 fiscal year decried the poor supplier payment practices of government departments, with the treasury warning, “This is seen as being counterproductive to the National Development Plan and the National Growth Path, which both strive to improve economic growth and reduce poverty, inequality and the unemployment rate in South Africa.” The Treasury’s report also revealed issues including misfiled, misplaced or improperly recorded invoices were often to blame for late or nonpayment, local reports said.
28 percent of suppliers working with GlaxoSmithKline’s consumer healthcare division were paid within 60 days, very different from the U.K. Prompt Payment Code’s requirement that 95 percent of small suppliers be paid within 60 days. Today, however, GSK has improved its vendor payment practices, telling the Small Business Commissioner that the average small supplier is paid within 18 days. As such, the company has returned to the Prompt Payment Code’s good graces. “Since the Small Business Commissioner took on [the] administration of the code in March 2020, we have seen more than 1,126 new signatories,” said U.K. Small Business Commissioner Liz Barclay.
95 percent of invoices from small suppliers must be paid within 30 days, according to the new requirements of the U.K.’s Prompt Payment Code. Reports in ICAEW said that this reduces the timeline of supplier payments by half compared to the old version of the Prompt Payment Code, which saw signatories committing to paying small suppliers’ invoices within 60 days. “It’s an important tool in driving change in payment culture but there is no single silver bullet,” said former Small Business Commissioner Philip King. “Cultural change requires fundamental change and a shift in mindset that focuses on collaboration and partnership working. Paying on time needs to be seen as a key part of the ESG agenda,” King added. U.K. grocery conglomerate Tesco recently drew criticism for its decision to leave the Prompt Payment Code
$55.06 million in assets of Evergrande Group should be frozen as a result of overdue supplier payments, argued one of the latest suppliers of the China real estate conglomerate. The Hong Kong advertising company is requesting the asset freeze after its recent securities filing revealed it is owed the funds. In a separate case, another supplier of the construction firm is also accusing the conglomerate of 33 million yuan (approximately $5 million) in overdue payments.