smallbusiness.co.uk: Helping your business think big

Small companies are being harmed by bigger businesses' attitudes to prompt payments.

The Forum of Private Business (FPB) claims that many large firms are not seriously considering the government's Prompt Payment Code, which obliges them to settle invoices in a timely fashion.

According to the organisation, just eight FTSE 100 companies have signed up to the initiative, which Phil Orford, chief executive of the FPB, claims shows large businesses are refusing to account for their actions.

He comments: 'The problem has not been the initiative itself but the attitude of big businesses towards it.

'It is vital that FTSE 100 companies sign up without delay in order to nurture the certainty and stability that is lacking for small businesses.'

Stuart Blake, FPB late payment adviser, also recommends that small firms learn to stand up for their rights when it comes to payments.

He advises businesses to emphasise that they only supply goods and services on the original terms agreed and says that contract law gives them a degree of protection.

A recent study by Continental Research revealed that more than half of the UK's small firms failed to make a profit in the opening months of 2009.

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