The Fair Payment Code: what signing up commits your AP team to

Signing the Fair Payment Code commits your accounts payable (AP) team to paying at least 95% of invoices inside a 30- or 60-day window, with the award dated and valid for two years. Whether you keep that commitment depends on how quickly you capture each invoice and route it for approval, then include it in a payment run.

This is general guidance for UK finance teams, not legal advice; take qualified advice where your contracts or circumstances decide the outcome.

Key takeaways

• Signing commits your AP team to paying a set share of invoices inside the tier’s window, agreeing terms in writing before work starts, warning suppliers early when a payment will slip, and paying undisputed amounts on time.

• The code is voluntary and free, run by the Office of the Small Business Commissioner on behalf of the Department for Business and Trade.

• Awards are tiered and expire after two years, so you reapply with fresh payment data and supplier references.

• Every tier tests the share of invoices paid in time, not your average days to pay, so you need invoice-level dates, and Silver also needs them split by supplier size.

• A signatory that falls below the criteria faces an action plan, a lower tier, or removal; statutory interest and payment reporting duties sit in separate law.

What the Fair Payment Code is

The Fair Payment Code (FPC) is a voluntary UK code for business payment practices. The Office of the Small Business Commissioner (OSBC) launched it in December 2024 on behalf of the Department for Business and Trade (DBT), and it replaced the Prompt Payment Code. The OSBC describes it as “a tiered system of Awards aimed at driving best practice and improving payment performance”, with Gold and Silver categories. Bronze is also available, and there’s no charge for taking part. An award lasts two years, after which you reapply, and the OSBC Fair Payment Code FAQ confirms that the 2026/2027 application window is open.

Every awardee, whatever the tier, agrees to three principles:

Be Clear: Agree payment terms in writing, in plain English, before work begins, and tell suppliers promptly when a payment may fall outside those terms.

Be Fair: Pay within the code’s terms and the agreed timeframe, including the undisputed part of a disputed invoice. Accept late payment interest and compensation where delay damages a supplier.

Be Collaborative: Build dispute-avoidance mechanisms into contract management and promote fair payment across your industry.

Signing the application also commits the business to engage with the FPC team on any supplier complaint.

Gold, Silver, and Bronze: the payment thresholds explained

Each tier tests the share of invoices paid within a window, counted from receipt of the invoice:

Sources: Office of the Small Business Commissioner, Fair Payment Code criteria and FAQ pages.

The tiers set no average-days target, which changes the data you need. A report that says “we average 28 days” says nothing about the 5% tail. You need the received and paid date for every invoice, tagged by supplier headcount. Gold also asks for an example standard contract providing for late payment interest at the statutory rate. If you miss your tier, the OSBC considers you for a lower one or offers an action plan under the options set out on its criteria page.

Fair Payment Code vs Prompt Payment Code: what changed

The Prompt Payment Code (PPC) had one standard and a signature; the Fair Payment Code has three tiers and an evidence file:

Sources: Office of the Small Business Commissioner, Prompt Payment Code and Fair Payment Code pages.

The old blanket standard survives as the Bronze entry level, Silver roughly matches the combined PPC requirement, and Gold extends 30 days to every supplier. The bigger change concerns proof. The government’s September 2024 announcement said businesses would “need to prove they have met good payment standards” before being awarded code status.

Who can sign up and how to apply

Any business or organisation with a UK registered address can apply, whatever its size or sector. The OSBC FAQ confirms that universities, charities, community interest companies, and co-operatives can apply. Public bodies cannot apply, including government departments. Local authorities and NHS trusts are also excluded. A company that must publish payment practices reports but has not done so is not eligible.

The OSBC sends the application form by email on request. The OSBC application process starts by email, so allow time in your AP calendar for references:

1. Email fpc@smallbusinesscommissioner.gov.uk and ask for the application form and guidance. Request the evidence checklist too.

2. Export at least six months of payment data from your accounting or invoicing software, or use your published payment practices report. Alternatively, obtain a signed statement from a director, CFO, owner, or external accountant.

3. Secure at least two supplier references, one from a supplier with fewer than 50 employees, confirming headcount and the average days you take to pay them.

4. Have a director, CEO, CFO, or owner sign as the person with authority to commit the organisation.

5. Submit the form and evidence; the FPC team aims to process applications within 10 working days, subject to references and evidence.

The OSBC does not accept a bare list of invoices and paid dates. If capture and payment live in one system, step two is an export rather than a reconstruction from bank statements.

Applications in the September to December window earn an award for the next two calendar years, and the FPC team contacts you before it expires.

Is the code binding, and how does it sit alongside late payment law?

The Fair Payment Code is voluntary: GOV.UK calls it “a voluntary code of practice for companies of any size”, and falling short leads to an action plan, a lower tier, or removal, not fines.

Under the Late Payment of Commercial Debts legislation, a supplier can charge statutory interest and compensation on a late business-to-business payment where the contract sets no different rate. GOV.UK’s late commercial payments guidance sets out when a payment counts as late.

If you are a large company, your payment practices reporting duty runs on its own calendar. The largest UK companies and limited liability partnerships (LLPs) must publish reports under the duty to report rules. The OSBC states that the code has no bearing on those requirements, although published report data can support your application.

What suppliers can do when a signatory pays late

A supplier or any third party can report an awardee to fpc@smallbusinesscommissioner.gov.uk. The FPC team assesses the evidence and may start a compliance spot-check under its complaints process. The team does not treat one late invoice as failure; it reviews performance by quarter.

After one quarter below the criteria, the FPC team agrees an action plan. After two consecutive quarters below the criteria and no engagement, the OSBC is likely to downgrade or remove the business, and a removed business loses the right to use the logo. Refusing to engage with a complaint, or harassing a complainant, leads to removal.

Separately, a supplier can claim statutory late payment interest and compensation unless the contract sets a different rate, and signatories have agreed under the Be Fair principle to accept it where delay damages a supplier.

Suppliers with fewer than 50 employees can also use the OSBC’s free, confidential enquiry route, which aims to settle disputes within 40 business days.

Other things called a fair pay code

Several employee pay laws carry similar names.

India’s Code on Wages, 2019 is a national labour statute enacted on 8 August 2019. It consolidates India’s laws on minimum wages, payment of wages, bonuses, and equal remuneration, and it largely took effect on 21 November 2025.

The Fair Labor Standards Act is US federal law setting the federal minimum wage and overtime for hours beyond 40 in a week.

The Lilly Ledbetter Fair Pay Act of 2009, also US federal law, lets an employee file a pay-discrimination charge within the standard window after each affected paycheck. For UK supplier invoices, the Fair Payment Code and late payment law are what apply.

How an AP team can meet Fair Payment Code thresholds in practice

Most missed thresholds trace back to fixable capture and approval gaps or infrequent payment runs. In the DBT and IFF Research late payments study (fieldwork January 2024), 36% of surveyed UK businesses blamed administrative errors for paying suppliers late. Only 1% said they did it on purpose.

Work through these checkpoints in order:

1. Invoice capture: The clock starts at receipt. Route supplier invoices to one address and log them on arrival.

2. Approval routing: Assign delegation cover for each approver before their leave starts.

3. Payment execution: Count the days from approval to the next run, then decide whether the run frequency or the approval deadline has to change.

4. Reporting: For financial years beginning on or after 1 January 2026, in-scope large companies must state average days to pay in their directors’ reports. They must also state payment percentages for days 1 to 30 and 31 to 60, with a separate band for 61 days or more. Run your monthly AP report on the same 30- and 60-day thresholds the code uses.

Those checkpoints are hard to hold when capture, approval, and payment live in separate tools. Spendesk is an all-in-one spend management platform consolidating company cards, expense management, accounts payable, procurement, and budgeting. Its accounts payable automation tracks each invoice from capture to payment; see how Spendesk connects invoice capture to payment.

Checking a company’s Fair Payment Code status

The OSBC publishes its awardees in its Awardees Directory, searchable by organisation name or by one of 19 industry sectors. Each entry shows the organisation name, industry sector, Companies House number, area, award level with the year it runs until, and registration date.

Frequently asked questions about the Fair Payment Code

Fair payment under the code concerns supplier invoices, not employee wages. The answers below explain that distinction and how to check award status or respond to late payment.

What does fair payment mean under the Fair Payment Code?

The OSBC measures fair payment invoice by invoice, starting the clock when you receive each one. It covers every supplier, so invoices to large suppliers count towards the 95% just as small-supplier invoices do.

What is the Code on Wages, and is it connected to the Fair Payment Code?

No, the Code on Wages, 2019 is Indian employee pay law and has no bearing on UK supplier invoices.

How can I check a supplier’s Fair Payment Code status?

Search the OSBC Awardees Directory by the supplier’s name, then compare the award level and the year it runs until with what the supplier claims in its tender or contract.

What happens if a Fair Payment Code signatory pays late?

One late invoice won’t cost a signatory its award. Repeated quarterly shortfalls lead to an action plan and, without engagement, a likely downgrade or removal, and the supplier can report the signatory to the FPC team and may be able to claim statutory interest under its contract terms.