ONE of Southampton’s major employers has been suspended from the government’s Prompt Payment Code for not living up to pledges to settle invoices on time.

But British American Tobacco (BAT) – which has around 1,200 staff in the city – insists 97 per cent of its suppliers are paid within 60 days.

Eighteen businesses were suspended from the code, including Screwfix, Prudential, BAE Systems, BT and British Gas owner Centrica.

The code is administered by the Chartered Institute of Credit Management (CICM) on behalf of the Department for Business, Energy and Industrial Strategy.

The suspended companies can no longer use government branding or say they are signatories of the code and must now work with the CICM to get reinstated.

All but one have submitted action plans to deal with prompt payment.

Members of the code commit themselves to paying 95 per cent of all supplier invoices within 60 days.

BAT says some of its bigger suppliers, who have mutually agreed longer payment terms, account for a disproportionate number of invoices.

Simon Cleverly, group head of corporate affairs, said: “At BAT, we have robust payment processes in place, and as such, 97 per cent of all our suppliers are paid within 60 days, and our average time to pay a supplier is 46 days.

“Like many companies, we do have longer, mutually agreed payment terms with a few of our largest suppliers.

“We are in ongoing discussion with the Chartered Institute of Credit Management (CICM) and are committed to delivering our action plan by the end of the year.”

Another 17 businesses were removed or suspended in April, including Vodafone and engine maker Rolls Royce.

CICM chief executive Philip King said: “We will continue to challenge signatories to the code if the obligatory Payment Practice Reporting data suggests that their practices are not compliant.

“We are encouraged that of the 18 who have been suspended or removed today, all but one has already submitted action plans to achieve future compliance, and we are working closely with those businesses to support a better payment culture.”

The one company which has not submitted a plan is AB World Foods, which is owned by Primark’s parent company, Associated British Foods.

Small Business Minister Kelly Tolhurst added: “As a former small business owner I know how damaging late payments can be.

“Although the vast majority of businesses pay their bills on time, we recently announced ambitious new measures to level the playing field for small businesses as part of our modern industrial strategy.”

A new rule to be implemented in September means any supplier who bids for a government contract above £5million a year will be expected to answer questions about payment practices and performance.

If they are unable to demonstrate that they are paying 95 per cent of invoices within 60 days, they may be excluded from the bidding process.

Atos IT Services, which was removed from the code earlier this year, has been reinstated after administrators for the scheme were happy with changes the company made to its payments.

Screwfix, BAE Systems, Prudential, BT and Centrica all defended their payment practices but said they were working to improve.


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