"Responsible payment practices are actually a question of enlightened self-interest" - this was the argument put forward by Pete Redfern, CEO of Taylor Wimpey, during the latest of UK Finance's series of Covid-19 impact webinars which looked at the importance of supporting supply chains during the pandemic.

UK Finance's Stephen Pegge and the government's Small Business Commissioner (SBC), Philip King, were joined by Pete, Alex Hilton-Baird, CEO of the specialist financial advisory firm Hilton-Baird Group, and Vodafone's Global Supply Chain Director, Ninian Wilson. They discussed the challenges faced by both small and large businesses during what Stephen rightly distinguished as a crisis with serious financial consequences, rather than a financial crisis of the type seen in 2007/8. 

With the resilience of the financial sector itself significantly stronger than in 2007, the key challenges are less around wholesale availability of finance  than getting working capital flowing around the economy and supporting businesses in trading through. This brings us to two inter-related priorities; direct government cash interventions and the facilitating of lending into the real economy and the flow within it. The former measures have been subject to extensive public and political debate over the last two months.  However, the responsibility of businesses themselves to continue to deal with their counterparties reasonably in difficult circumstances has perhaps been considered less.

This was the focus of this webinar and Philip outlined the role of the SBC in policing payment practices, and the soft and hard powers available to take action to address poor behaviour but also to highlight good practices.

A prominent example of the good it has done has been the Taylor Wimpey Pay It Forward initiative, which sees the firm committing to continue to pay its supply chain on time and also includes targeted support for self-employed sub-contractors with whom the firm has a long-term relationship. The firm provides advance payments for future work to be undertaken, combined with a free and confidential helpline for sub-contractors offering guidance on, amongst other things, mental health, well-being and finances.

Similarly, in addition to Vodafone's business-as-usual responsible approach to managing often complex global supply chains, Ninian outlined the firm's commitment to supporting its micro and small suppliers during the pandemic, with the acceleration of payment terms to 15 days. Both he and Pete agreed that whilst there was a self-evident responsibility to support supply chains, it was also essential for their own businesses that they had diverse and stable suppliers that they could rely on when the economy restarts.

On the subject of achieving cultural change in payment practices, it was notable that senior representatives of two of the UK's most prominent businesses in very different sectors agreed with the Small Business Commissioner that the current crisis was an opportunity ?for big firms to do the right thing?. Food for thought perhaps, as we look to a potential easing of the lockdown and the restart of the economy.

Through their focus on underlying debtor books, invoice finance and asset based lending (IFABL) providers have an insight into payment trends and behaviours in particular sectors and across the wider economy. UK Finance is keen to harness that largely unique insight and we are grateful to those members that have been contributing to our new weekly Payment Trends report. IFABL members interested in contributing to and receiving this report should contact the team.