The bullies are in evidence 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 most acutely. The average small business is owed £31,000 in overdue payments, amounting to over £30 billion across the UK economy.

 

The UK has 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 2013 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. As many as 17% of suppliers claim that they have been subject to intimidation over payment terms by their buyers.

 

There is evidence that the bigger the company, the harsher the terms. For example chocolate manufacturers Cadbury and Mars are now seeking payment terms of 120 days from their suppliers.

 

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