Prompt payment code: Action plan
Cognizant is committed to maintaining fair payment terms for all our suppliers and it is important to us that we pay our suppliers in compliance with our agreed payment terms. In the U.K., we have a statutory duty to report payment practices and performance on a six-monthly basis, as prescribed by Department for Business, Energy & Industrial Strategy Reporting Guidance. This information is published here.
Cognizant monitors the payment statistics continually and reports them monthly to the Finance leadership and our Audit Committee. As part of our commitment to continuously improve our payment performance, we have identified some causes for payments to our suppliers to be longer than they could be. These are:
- Some invoices from our suppliers are addressed to the wrong Cognizant affiliate thus requiring many processing cycles for clarifications.
- Payment terms with our end clients are greater than 60 days. Our clients have increased further such payment terms due to the Covid19 impact, causing us to review our working capital.
The actions that we are taking to address these identified areas of improvement are:
- We will implement electronic invoicing to facilitate faster payment by the next financial year (FY2021)
- We will improve proactive communications with the supplier to ensure that all information that is required to pay an invoice promptly is provided, thus reducing processing cycle time
- We have, despite the challenges of having longer terms with our clients, now approved a maximum 60 day payment term for all non-public suppliers serving us in the U.K. We will notify all impacted suppliers by September 2020.
- We will continuously review the impact of these changes and work towards improving the payment performance further against the goal of having 30 days as the norm. The payment performance metrics are reviewed by our Finance leadership and the Audit Committee.
The above action plan is approved by Cognizant Worldwide Limited’s Finance leadership and signed by our General Counsel, EMEA.