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Small Businesses Still Threatened by Late Paying Big Businesses
Almost three quarters (74.7%) of smaller
businesses say that late payments severely
affect cash flow and pose a ‘considerable
threat' to the viability of the firm,
according to a survey carried out by the
Forum of Private Business (FPB). In
particular, respondents blame big business
for delays.
Big public sector organisations are pretty good these days", said
Edward Handley of Big Wheelers Ltd, a
training company in Reading. "But the big
companies can be a nightmare, with
complicated purchasing systems that are
designed to create delays in paying." Almost
36% of business owners who responded to the
survey said that public sector bodies were
also poor at paying on time.
Another respondent, who wished to remain anonymous, said: "The
larger the organisation, the worse it is at
paying. This has a severe effect on our
business and our relationship with our
suppliers as the knock-on effect is that
sometimes we are late in paying them." But
there was praise for public sector
organisations from John Geddes of John
Geddes Cycles Ltd in Widnes, Cheshire, who
said that: "Once you have an order number,
they are good payers."
The FPB, which represents 25,000 smaller firms across the UK,
campaigned for ten years finally to win a
statutory right for firms to charge interest
on late payments. In June, the FPB sent a
letter to the new Chancellor the Exchequer,
Alistair Darling, asking him to make
tackling late payment a priority.
The FPB has also complained that supermarkets unilaterally change
the terms of trade with their suppliers. The
survey reveals that 66% of business owners
responding thought that, when this happened,
smaller firms should be able to complain in
confidence to the Office of Fair Trading
(OFT) or the Competition Commission. One
business owner told the FPB that the problem
was "dictatorial statements of trading terms
by large customers resulting in slower
payments".
Matt Hardman, the FPB's Campaigns Manager, said: "Our survey adds
to a growing body of evidence that
smaller-business suppliers are often bullied
and treated unfairly by big business. While
most of the public sector seems to have got
the message on late payment, big business is
dragging its feet. The OFT needs to find a
way of addressing this problem."
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