Fair Payment Code (FPC) - Fact Sheet

Introduction

This guide explains the scope and principles of the Fair Payment Code (FPC), a UK Government-backed framework launched in late 2024 to promote fair, transparent, and timely payment practices across the business landscape. The FPC replaces the former Prompt Payment Code (PPC) and introduces a tiered award system to encourage improved payment behaviour, particularly in support of small and medium-sized enterprises (SMEs).

Late payment continues to be a significant challenge for UK businesses, especially SMEs, where delayed cash flow can jeopardise operations and growth. Through the FPC, the Government aims to foster a commercial environment where businesses are rewarded for responsible payment practices, and supply chains are protected from financial strain caused by delayed or disputed payments.

1. What Is The Fair Payment Code (FPC)?

The Fair Payment Code (FPC) is a UK Government-backed initiative launched in November 2024 and became operational from 3 December 2024. It replaced the Prompt Payment Code (PPC). It aims to improve payment culture by encouraging businesses to pay suppliers on time, support smaller firms, and build fairer supply chains.

Unlike the PPC, which was a binary compliance model, the FPC introduces a tiered award structure — Bronze, Silver, and Gold—based on how quickly and reliably an organisation pays its suppliers. These awards are designed to publicly recognise strong payment performance and incentivise continuous improvement.

The Office of the Small Business Commissioner (SBC) remains the overseeing body, and while the Code is voluntary, non-compliance can still result in public delisting, affecting a firm’s reputation and eligibility for certain public sector opportunities. The FPC marks a shift toward a more transparent and reward-based system, aligning ethical payment practices with competitive commercial advantage.

2. Scope

Late payment remains a serious issue across UK business. According to the 2025 Intuit QuickBooks Small Business Late Payments Report, approximately 62% of small businesses report receiving late invoice payments with the average amount owed reaching £21,400 per firm. Additionally, around 11% of invoices remain unpaid more than 30 days past their due date. The FPC, which replaced the PPC, aims to combat unclear or unfair payment practices by promoting commitments to transparent terms and swift invoice settlement. Following the Code's overhaul in 2021 and subsequent change (to the Fair Payment Code in 2024), Certified organisations under the FPC are expected to pay 95% of invoices within 30 days (for small suppliers) and within 60 days for others, in line with best practice.

The FPC also introduces a tiered recognition system (Gold, Silver, and Bronze) and public accountability measures. Although over 3,300 organisations are registered under the scheme, late payment remains widespread, highlighting the ongoing need to strengthen the UK’s responsible payment culture. Read more in the Government announcement on late payment reforms.

3. Fair Payment Code Requirements

Pay Suppliers On Time

Certified organisations must:

• Pay suppliers within agreed contractual terms;
• Not alter payment terms retrospectively or unilaterally; and
• Avoid imposing unreasonably long payment terms, particularly on small and micro suppliers.

Give Clear Guidance To Suppliers

Certified organisations must:

• Provide clear and accessible guidance on payment procedures;
• Maintain a transparent, prompt system for handling payment queries, complaints, and disputes — including a named point of contact; and
• Notify suppliers promptly when invoices will not be paid in accordance with agreed terms, providing a clear explanation.

Encourage Good Practice

Certified organisations are expected to promote the principles of the Code throughout their supply chains. This includes encouraging lead contractors and subcontractors to adopt fair payment terms and discouraging practices that disadvantage smaller businesses.

Under the Fair Payment Code:

• Bronze certification requires payment of 95% of invoices within 60 days;
• Silver certification includes 95% within 60 days overall and 95% of invoices to small suppliers (fewer than 50 employees) within 30 days;
• Gold certification requires 95% of all invoices paid within 30 days.

Additional Resources

Businesses can review the payment performance of large firms via the Payment Practices Reporting portal and access practical advice from the Small Business Commissioner website.

This guidance should be read in conjunction with:

• The Housing Grants, Construction and Regeneration Act 1996 (as amended)
• The Construction Supply Chain Payment Charter
• The Late Payment of Commercial Debts Regulations 2013
• The Public Procurement Review Service
• Payment Performance Reporting Requirements under the Duty to Report regulations
• The Public Contracts Regulations (2015)

4. Important Changes To The PPC

Significant reforms were introduced to the Prompt Payment Code (PPC) from 1 July 2021, aimed at addressing persistent late payment issues across UK supply chains. These reforms included:

• A requirement to pay 95% of invoices from businesses with fewer than 50 employees within 30 days;
• A general requirement to pay 95% of all invoices within 60 days;
• A stipulation that large signatories report payment performance on a comply or explain basis, while SMEs were encouraged to report voluntarily;
• An explicit recognition that suppliers have the right to charge statutory interest and late payment compensation on overdue invoices where no valid justification for non-payment exists;
• A requirement that applications to join the Code be signed by a Chief Executive, Finance Director, or business owner (for SMEs);
• An expectation that signatories provide a named contact point for suppliers to raise payment queries.

The PPC also encouraged (but did not require) large signatories to include, in their biannual reporting, the percentage of invoices paid within 30 days to suppliers with fewer than 50 employees.

Replacement By The Fair Payment Code (FPC)

As of 28 November 2024, the Prompt Payment Code was formally withdrawn and replaced by the Fair Payment Code. From 3 December 2024, the FPC became the sole recognised voluntary code for fair payment practices in the UK.

The Fair Payment Code introduces a tiered certification model:

• Gold: 95% of all invoices paid within 30 days;
• Silver: 95% of all invoices paid within 60 days, and 95% of invoices to small suppliers paid within 30 days;
• Bronze: 95% of all invoices paid within 60 days.

Although over 3,300 organisations were previously listed under the PPC, certification under the FPC requires fresh application and adherence to enhanced standards, with failure to comply potentially resulting in public suspension or removal from the register.

5. Further Information

To apply for certification under the Fair Payment Code, please log in and complete the Fair Payment Code application form.

Please note: this factsheet was last updated in June 2025, is aimed for general information purposes only and does not constitute legal or other professional advice. The information is considered to be correct at the date of publication however any changes and further developments may impact the accuracy and validity of the information provided here. For further advice or assistance with a contract review please contact Legal & Commercial team on legal@thebesa.com.