Title: Settling debts in the supply chain: do prompt payment codes make a difference? A UK study

Authors: Christopher J. Cowton; Leire San-Jose

Addresses: Huddersfield Business School, University of Huddersfield, Queensgate, Huddersfield HD1 3DH, UK ' Facultad de Ciencias Economicas y Empresariales, Departamento de Economia Financiera II, University of the Basque Country, Avda. Lehendakari Agirre 83, 48015 Bilbao, Spain

Abstract: Trade credit has only recently been taken seriously by business ethicists, despite the common practice of slow payment of suppliers. In response, the UK has introduced a series of voluntary 'payment codes'. However, at the time to which our data relate, relatively few FTSE 100 companies had signed up. Furthermore, although signatories paid more quickly, the difference was not statistically significant. These two findings might appear to suggest that payment codes are ineffective. However, some companies claimed to be following a code which was defunct. Their payment speed was indistinguishable from non-signatories, but those that had signed the extant code paid significantly more quickly. Our findings not only suggest that a payment code might be effective but also show a result relevant to codes of ethics more generally - that there might be signs that a company is not taking a code seriously, which we identify with the notion of hypocrisy.

Keywords: codes of ethics; late payment; payment codes; prompt payment; supply chains; trade credit; trade creditors.

DOI: 10.1504/IJBGE.2021.113945

International Journal of Business Governance and Ethics, 2021 Vol.15 No.2, pp.153 - 168

Received: 20 Nov 2018
Accepted: 20 Jan 2020
Published online: 02 Apr 2021 *

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