The Builders Merchants Federation (BMF) has called on the government to tackle poor payment practices between businesses by enforcing the Late Payment Code.

Responding to the Department for Business Innovation & Skills’ (BIS) consultation paper, ‘Building a Responsible Payment Culture’, the BMF said late, incomplete or non-payment of bills is a long-standing issue faced by merchants that must be tackled.

“The trend by some builders and contractors to move to 120 days as a default position has to be confronted,” said BMF managing director John Newcomb. “The primary issue is adhering to agreed terms. Late means late, not extended. The secondary issue is whether a supplier is forced to agree a longer settlement period than he wants. The Late Payment Code is an obvious first starting point, but while the Code remains voluntary, we doubt the majority of b2b payments will be made in less than 60 days.”

BMF policy manager Brett Amphlett added: “We recognise that ministers like Vince Cable and Michael Fallon want to solve this shameful practice and appear ready to ‘name and shame’ firms who are slow to pay. It cannot be right that firms whose default payment cycle is 60 days or more can sign this Code. It is called the Prompt Payment Code – not the Extended Payment Code”.

The BMF went on to argue that the Institute of Credit Management should renew its efforts to promote and explain the Code, and that seeing a signatory warned publicly about its conduct would give more confidence to sceptical suppliers.

The Federation also suggested that until settlement of bills becomes elevated to board level responsibility, this problem will persist. Only mandatory disclosure would begin to uncover companies that pay bills late, incompletely, or not at all, it argued.