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The push to stop the bullying of smaller businesses
The push to stop the bullying of smaller businesses.
Is your business being bullied by suppliers or struggling to receive payments for completed work?
The Federation of Small Businesses (FSB) has reported that many small businesses are being pushed to breaking point by a combination of bullying corporate customers making immoral payment demands and larger clients refusing to pay within specific dates written into contracts.
Practices included the “pay-to-stay” demands, whereby suppliers are asked to make cash payments to keep their contracts. The FSB said supply-chain bullying was increasingly widespread across sectors from the grocery and retail business to construction and manufacturing. The lobby group said about 260,000, or 5% of small businesses could be facing “pay-to-stay” charges.
Other examples of poor payment practices included making suppliers wait up to 120 days for payment rather than the EU standard of 60 days. Larger companies would obtain a cheaper price by unilaterally cutting 3% off their own bill for paying the supplier early or even on time – which could be 120 days after the invoice date.
However there is good news on the horizon. Speaking last week, new Business Secretary Sajid Javid announced a new Enterprise Bill to be included in the Queen’s speech this week.
He stated: “As part of our long-term economic plan, we will sweep away burdensome red tape, get heavy-handed regulators off firms’ backs and create a Small Business Conciliation Service to help resolve disputes.”
The new conciliation service is expected to help settle disputes between small and large businesses. According to the department for business, innovation and skills, small firms in Britain are owed over £32bn in late payments from larger entities.
For smaller companies this cannot come soon enough. Late payment harms business cash flow, hampering investment in growth and in extreme cases potentially risking a firm’s solvency. The need to chase late payments can also add costs to businesses.
The rising trend in late payment has put increasing strain on all businesses, but specifically small businesses.
It is however relatively cheap and quick to use a solicitor that specialises in litigation to put pressure on claiming money that is owed to you and take pressures off your cash flow worries.
If the items in this article are an area of concern for your business, please contact Chorus Business Advisers on 0845 8671263 or email email@example.com for more info.