In Focus Commercial Credit
responded to a government consultation on how to create a responsible payment culture by recommending that the Prompt Payment Code be made compulsory for companies with more than 250 staff, and its payment terms be halved from a maximum of 60 days to a maximum of 30 days. One of the roundtable attendees suggested
that organisations in the public sector should specify in contracts that any businesses that win public-sector contracts must pay their supply chain quickly, and not try to use prohibitive statements to slow that process down.
Acting responsibly Ultimately, doing good is good for business. Strong companies do not just operate for profit margins, they focus on relationships and collaboration. For contractors, if you have built good social relationships, you are going to have better relations, which, in turn, lead to the ability to win more contracts, and get more dedicated people working for you. However, working responsibly cannot just
be siloed within individual departments, it has to be fully integrated into a business. It can only be done well if doing good extends across your whole operation, into your entire business strategy, and modelled by senior leadership. Some businesses may be at the early stages
of trying to be responsible, doing some ad hoc volunteering in their local community, but might not have considered how that translates to their entire business strategy. This is where organisations like Work For Good and Heart of the City can come in to advise them. In certain areas of the public sector, as
budgets have been cut for years and they cannot necessarily provide services themselves, organisations are now realising they can bring social value requirements into contracts with external suppliers. They have started to look at the big picture, although many do not yet reliably monitor social value. Monitoring is a key element that could
help embed a responsible business culture in organisations. It is easy to talk about being a responsible
business, but it is another thing to actually demonstrate the difference you are making. It was suggested at the roundtable that a
December 2018
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common measurement of social value should be introduced, to help businesses easily understand how projects can contribute to a wider good. This measurement could then be published to help others see and understand.
Confidence in the system If a business is 15 days late in sending an invoice, that can add unnecessary time onto an already lengthy payment term. However, if accountants working with businesses have
the right systems in place, they could help suppliers collect money quicker, by making sure invoices are drawn up on time. The increasing use of automation and technology in accounting could help with this by providing invoices automatically, straight away. Automated reminders could also help,
chasing organisations for payment, potentially pushing businesses, which use them, to the front of the queue and keeping them in their clients’ minds. With cloud-based computing and
Organisations in the public sector should specify in contracts that any businesses that win public-sector contracts must pay their supply chain quickly, and not try to use prohibitive statements to slow that process down
accounting coming in, accountants will be increasingly working in real-time, moving from a position where they were looking at accounts six to nine months after the end of the year and talking to clients about things that were no longer relevant, to one where they will be advising in real-time. With this change, accountants will be moving into more of a consultancy role, and there could be scope to embed a responsible business mindset here. CCR
Edited from Responsible business: Post-Carillion, how can businesses and suppliers work together to rebuild trust? by the AAT
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