New credit payment option to be introduced for retailers
Ofwat has agreed a modification of a code change proposal put forward by Everflow Water to reduce what the company considers burdensome credit support requirement for retailers who post-pay wholesalers. Everflow argued these requirements tie up working capital that could be spent on improving services for customers.
Under CPW117, retailers will be able to opt in to a new payment option, supplementing the existing options of pre-pay, post pay and alternative payment terms. The new option, termed Reduced Notice Post-Payment, will take nine days off the credit support amount post-pay retailers have to post, in exchange for giving up the ten business days that currently separate the payment due date and the date on which the wholesaler sends out a late payment notice.
The code change will be implemented on 5 November.