Fair Payment Code Major Focus at the 2025 CFO Summit | IE

 A rebrand of the Prompt Payment Code (PPC), the FPC was introduced in December 2024 to help smaller construction firms identify reliable and trusted partners while tackling the issue of lengthy payment terms and late payments.

This came after many small and medium enterprises (SMEs) appealed for a more robust, ambitious, and aspirational approach towards business-to-business payment culture. However, despite its transparency and competency benefits, take-up has been slow. Indeed, Christina Wilson revealed very few companies that had previously signed up to the Prompt Payment Code had re-signed up to the Fair Payment Code.

With that in mind, the question was raised, ‘Is the Fair Payment Code helping?’

Both Christina and Rob spoke positively about the potential of the FPC but raised certain concerns about the use of it in its current form and detailed the various reasons why adoption had been minimal so far.

Indeed, it was revealed there had been a lack of trust in the PPC and as such, it had been abandoned due to the need for ongoing monitoring and enforcement. Consequently, those in the industry have been hesitant to sign up to the FPC. Additionally, with the scheme being entirely voluntary, and requiring additional time and resources to report on small payments, people have questioned why they should sign up to something that takes up even more of their precious time.

The prioritisation of cash protection in Construction

With the UK currently in the midst of a cost-of-living crisis and the construction industry witnessing many companies becoming insolvent in recent years, many quantity surveyors, contractors, subcontractors and SMEs are focusing more on protecting their cash. This has led to  an increasing hesitation to part with cash in case of project delays – often, if things go wrong on a project, people will hold back from paying until the issue has been rectified.

Similarly, some owners of companies and contractors may prefer to keep money in their accounts so that they look financially healthier. In either case, this can then lead to payment delays or subcontractors not being paid the amount they requested.

People aren’t inspired to volunteer

While the FPC is a great idea in principle, the fact it is not legally mandatory means businesses have the freedom to disregard its principles.

Consequently, as highlighted by the thought-provoking discussion at the CFO Summit, this can undermine its effectiveness. Additionally, while the prospect of announcing your business is signed up to the code is a nice lure, it still lacks a crucial push factor – such as making participation in the scheme mandatory for large businesses.

Indeed, the current lack of enforcement means there is no consequence for failing to meet the requirements. As such, it needs a robust legal framework to enforce its rules more

Administrative challenges

For many, attempting to deal with the administrative burden of adhering to the FPC’s requirements may prove too challenging and time consuming.

Maintaining accurate records of payments and ensuring timely payment can often taking up several hours of a day and requires various members of the team, so it’s perhaps unsurprising to learn that many companies are hesitating to sign up to the FPC. Making it intuitive and simplifying the process could provide the encouragement many need to take the step forward.

Finding the right balance

As Rob Driscoll highlighted during the FPC-focused talk at the CFO Summit, there is no silver bullet when it comes to fair and prompt payments. However, it’s essential that those in the industry strike the right balance between quality and risk appetite.

While the FPC was brought in to tackle the issue of late payments and lengthy payment terms, it’s important to appreciate that eachbusiness will have different levels of risk appetite.

In fact, while organisations and individuals with a higher risk appetite will be more willing to choose payment terms that involve early payments or percentage payments before completion, those with low-risk appetite will prioritise risk avoidance and adopt more cautious payment strategies.

With this in mind, it’s important for all involved in financial management in Construction to establish clear payment terms and standards and ensure open communication to manage risks throughout any project.

Early collaboration is key

Having cohesion between all involved in financial management will play a major role in improving the speed and fairness of payments. As Rob and Christina discussed, even the biggest construction firms are only as strong as their supply chain – so streamlining the payment process and having better collaboration will make a huge difference.

Similarly, there must also be a more cohesive approach taken by industry leaders and the government. Working closely with policy makers will further help to define what exactly a fair payment is and how ensuring compliance can be made easier.

Encouraging internal champions for culture change

One of the key topics of the discussion was the importance of changing payment culture. Educating people across the built environment on the importance of fair and prompt payments is absolutely essential. Rob and Christina discussed the benefits of encouraging internal champions in businesses.

In addition to training others and providing ongoing support, doing so can smooth the path for payment processes, promote enthusiasm towards the FPC, and drive internal buy-in to ensure a better understanding of just why fast and fair payments are crucial for the industry.

To conclude…

While it’s early days in the FPC’s lifespan, it certainly has the opportunity to foster change in the built environment. However, more construction companies must be encouraged to sign up to the Code – and that comes through increasing awareness, simplifying the process, and challenging the misconceptions of poor value and reduced enforcement.