The bullies are at it again.

 

During recent years many companies focussed on the element of supplier’s credit as they sought to improve their own bottom lines.

By virtue of their purchasing power large corporations such as the supermarkets are able to squeeze their suppliers.

It is the SME’s who are feeling the pressure with the latest report from BACS (the payment body) showing that the average small business was owed £31,000 in overdue payments in April, amounting to £30.2bn across the UK economy. According to the BACS report SMEs currently wait an average of 38 days.

In the UK already late-payment laws that give small businesses the right to charge interest, but many avoid doing so for fear of upsetting customers.

The EU issued a directive in March which aimed to enforce similar measures across the union, with public bodies given 30 days to pay and businesses 60.

Cash flow is a vital element for any business and timely payments are crucial for small businesses trying to grow.

Over the past couple of years many companies have lengthened payment terms seeing the suppliers as a soft target.

With suppliers consistently facing a declining return it should come as no surprise when they conclude that the game is not worth the candle.