The Prompt Payment Code has failed to improve conditions for the majority of British businesses, according to the findings of a study by accountancy software developer Sage UK & Ireland.
More than half (54%) of those surveyed said the Prompt Payment Code had been ineffective since being introduced.
The code, in principle, binds those who sign up to it to paying in full and on time, rather than delaying payment in order to benefit their own cash flow.
But the research found some payments are still being made up to three months later than the deadline, indicating that, in some circumstances at least, the code is simply not working.
Lee Perkins, managing director of Sage UK, said: “British businesses have given a damning verdict for the Prompt Payment Code, which has proved toothless and ineffective.
“There has been plenty of rhetoric, but not enough action, and firms are saying they are fed up.”
More worryingly, a massive 41% of those surveyed had never heard of the Prompt Payment Code at all, further highlighting how ineffectual it has been, and how poorly promoted it has been too.
The survey queried respondents about the effects they have experienced due to late payment – and the results make further worrying reading, not only for business leaders, but also for employees.
That is because 2.5% of businesses have had to delay paying their staff wages, due to late payments coming in from customers.
Around one in seven (14%) have delayed paying their suppliers due to late payments, demonstrating how cash flow problems can echo along the supply chain.
Overall, 44% of the businesses surveyed said they have experienced cash flow difficulties as a result of late payments, despite the supposed assistance of the Prompt Payment Code.