The Association of Professional Staffing Companies (APSCo UK) and APSCo OutSource, the trade body for the recruitment outsourcing sectors, are urging the government to extend the Payment Practices and Performance Regulations 2017 beyond 6th April 2024. The organisations hope that this extension will help to reduce the financial pressures on the contingent worker supply chain.
The associations have highlighted that those on the lower end of the supply chain face unfair financial pressures due to their position in the process. With contractor and contingent resources often requiring payment within 7 – 28 days of timesheet submission while end clients have longer payment terms that lie between 30 – 60 days, APSCo has warned that the middle-supplier is the firm out of pocket for an increasing length of time.
APSCo UK and APSCo OutSource believe that this situation is unsustainable in the current climate and is causing undue financial strain on often SME businesses.
Melanie Forbes, Managing Director of APSCo OutSource, has commented that “Our members across both the outsourcing and recruitment sectors are reporting increasing payment term periods with end clients which is stretching the purse strings of small to medium size businesses that often face footing the initial bill for large swathes of contractors without quick reimbursement. It’s common to see second tier suppliers bridging a payment gap of up to three months due to terms imposed on them or the managed services provider (MSP) by the end client.”
APSCo UK and APSCo OutSource believe that a number of changes are necessary to ensure fair and prompt payment terms across the recruitment supply chain. These changes include amending the current regulations to ensure more accurate reporting is required, payment practices and performance reports being included in director reports in order to hold firms accountable for prompt payment, and ensuring that the total value of payments due that have not been paid within the agreed terms is reported on to ensure long payment terms aren’t hidden in prompt payment reporting.
Additionally, APSCo UK and APSCo OutSource are calling for clarity around payment dates used for reporting across supply chain finance. Pay when paid terms are a risk to the stability of the supply chain, and the second tier supplier faces a potential loss of control around the payment and the contractual right to enforce the debt owed when unpaid. The organisations believe that the regulations should require a qualifying business to separately identify payment terms on contracts where they require advance payment to workers or other suppliers in a chain, or it is a statutory requirement, as in the case of a supply of a contingent worker to an end hirer. It should also be a requirement to disclose the differential in payment terms between their terms and those of the party paying the worker or worker’s employer.
Late payments are a real concern for the recruitment and outsource members of APSCo UK, and the proposed amendment to position disputed invoices as a separate entity is welcome news. However, the organisations recommend that this should include delayed payments due to complex billing processes.
APSCo UK and APSCo OutSource are urging the government to extend the Payment Practices and Performance Regulations 2017 beyond 6th April 2024 in order to reduce the financial pressures on the contingent worker supply chain. The organisations are also calling for a number of changes to ensure fair and prompt payment terms across the recruitment supply chain.