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Friday
Sep112009

Big name firms named and shamed over poor payment policies

Small businesses have named and shamed the big name poor payers who are squeezing their finances. 

Around 4,000 businesses went to the wall due to cash flow problems by late payments last year and one in three Federation of Small Business (FSB) members are waiting longer to be paid during the credit crunch.

By delaying payment, large companies are effectively pushing up the overdrafts of smaller companies who are paying for doing business with them.  A number of small businesses have contacted the FSB over the last year naming large companies that have extended their payment times:

    * Delivery firm TNT, food producer Bernard Matthews, and catering company the Compass Group have told small firms to wait 60 days for invoice payment

    * Builders merchants Jewson has done the same and is also charging a 10% settlement fee as a discount for paying within the 60 day period

    * Amazon has extended payment terms to 90 days with a 2% settlement fee if paid in that time or 120 days without one

    * Couriers DHL is charging 3% for paying invoices on time

    * Carlsberg has changed payment terms to 95 days from the end of the month of invoice, which could mean a wait 125 days for a bill to be paid

The FSB has written to these companies to explain how badly late payment affects the cash-flow of small firms, particularly during this economic period, and is urging them to sign up to the Government-backed Prompt Payment Code. 

John Wright, FSB national chairman said: "Poor payment practices can drastically affect cash-flow for small firms at a time when business owners are doing their best to hold on to precious funds.” 

Research by credit agency Intrum Justitia places UK businesses amongst the top 10 countries of late payers costing the economy 2.5% of GDP.



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