Small business owners want the UK government to outlaw late payments as new figures reveal that half of SMEs face financial stress due to not being paid on time.
In a new survey carried out by YouGov and reported by The Sunday Times, 61 per cent of small business owners strongly support the suggestion that the government should legislate to force companies to pay suppliers on time.
The idea put forward in the survey was to create a mandatory 45-day payment term for all invoices. Not only would such a move strengthen the hand of small suppliers and contractors when payments become late, it would also curb the practice of big businesses imposing punitive conditions, such as the notorious 120-day terms collapsed outsourcing giant Carillion insisted on.
Just 11 per cent of firms with fewer than 250 employees are opposed to the idea of legislation.
It sounds like something out of a Hollywood gangster film - a $50 million fraud, an attempt to launder the proceeds by buying a Picasso painting, and an undercover FBI agent who foiled it all.It sounds like something out of a Hollywood gangster film - a $50 million fraud, an attempt to launder the proceeds by buying a Picasso painting, and an undercover FBI agent who foiled it all.
But no, this is a real-life story. In place of gangsters, you can substitute stockbrokers whose crime was illegally fiddling share prices in a worldwide scam. After being caught red-handed, their actions led to the collapse of the firm they worked for, London-based Beaufort Securities, which was declared insolvent by the Financial Services Authority (FSA) in March.
Contractors and SME suppliers in the UK could finally be in line for legal protection from losses in the event of a client collapsing.
In the wake of several high-profile insolvency cases such as that of Carillion, which raised fears that suppliers could be left billions out of pocket in unpaid invoices, the government has launched a review of corporate governance regulations for companies entering insolvency.
Fears over the future of embattled toy retailer Toys R Us continue to mount after its UK business announced it was to seek a Company Voluntary Arrangement (CVA) to handle a mounting debt crisis.
The company, which is thought to have made a trading loss for seven out of the past eight years, has announced plans to close a minimum of 26 stores in the UK, with a loss of 800 jobs.
Wholesaler Palmer & Harvey has entered administration after failing to restructure significant debts owed to suppliers. The Palmer & Harvey Group, the UK’s fifth-largest privately owned business and the country’s largest tobacco supplier, had been in takeover talks with Carlyle, the private equity firm.
But after talks broke down, directors from several Palmer & Harvey group companies made an application to London’s High Court to enter administration to help ease an increasingly unmanageable debt burden.
Wholesaler Palmer & Harvey has entered administration after failing to restructure significant debts owed to suppliers.
The Palmer & Harvey Group, the UK’s fifth-largest privately owned business and the country’s largest tobacco supplier, had been in takeover talks with Carlyle, the private equity firm.
If your business doesn’t lay the right groundwork when working with customers, you’re leaving yourself wide open to the risk that you’ll never get paid at all. Time and again, we hear of well-meaning companies putting in in hours of labour - and investing into raw materials - only to find that their customer doesn’t have the means to pay the bill.
According to National Statistics, 4,547 companies entered insolvency in Q2 2017. And over the next few years, we foresee a turbulent time for small companies which could increase this figure significantly. If you don’t yet have full understanding of the companies you're dealing with, and their creditworthiness, your business could be just a few short months from a serious cashflow crisis.
Safe Collections is pleased to offer half-price credit reports from Experian. You pay just £9.99 to check the official credit report for your client; a small fee, but a big weight off your mind.
It is every supplier’s worst nightmare. You have finally secured a lucrative contract with a big name global brand, giving you what feels like a sense of security and assurance for future earnings.
Then, all of a sudden, the unthinkable happens - the company goes bust. From a position of relative comfort, you now find yourself at the back of a long queue chasing unpaid invoices you may well never recover.
Depending on how reliant your business is on that one big client, you could easily find yourself in jeopardy too, unable to absorb the loss.
Vertu Corporation Limited, the well-known British manufacturer of luxury smartphones, has finally filed for insolvency after being passed between owners since 2012.
The company was known for its spangly, jewel-encrusted handsets which came with equally ludicrous price tags. Its entry-level handset cost a cool £6,500; prices stretched to more than £250,000 for the garish Vertu Signature Cobra.
The UK’s supermarket watchdog has published its annual grocery code compliance list, naming and shaming supermarkets for poor treatment of suppliers and other breaches of the industry code of practice.The UK’s supermarket watchdog has published its annual grocery code compliance list, naming and shaming supermarkets for poor treatment of suppliers and other breaches of the industry code of practice.
This year, Asda has secured the dubious honour of having the poorest relationship with its suppliers, leapfrogging its West Yorkshire rival Morrisons which topped the shame list last year. Iceland, meanwhile, was ranked worst for overall compliance with the Groceries Supply Code of Practice in the past year.
The Grocery Code Adjudicator (GCA) has attracted sharp criticism for claiming that there is “no evidence” that late payments by supermarkets cause problems for suppliers.
Christine Tacon made the comments to Food Manufacture magazine, claiming that in the four years she has been in the role, retailers were honouring an average of 98 per cent of invoices on time.
The remarks have attracted disbelief and outrage from suppliers’ representatives in the industry. The Food and Drink Federation (FDF) pointed out the the government recognised there was a chronic cross-industry problem with late payments affecting SMEs, which make up 96 per cent of UK food and drink manufacturers.
With a little under a month before the UK goes to the polls - again - following PM Theresa May’s snap general election call, it is difficult to know on what ‘issues’ the public will be basing their votes.
Such has been the mad scramble caused by the election call, the major political parties have not yet even got round to publishing their manifestos - even the Tories, it seems, were caught on the hop by their leader’s out-of-leftfield decision.
One issue we’re sure all small business owners would like to see feature prominently is so-called late payment culture.
New York publishing house Condé Nast has reportedly come up with a novel solution to the tricky issue of ensuring its contributors get paid on time.
As reported here, the magazine empire behind global titles such as Vogue, Vanity Fair, GQ and Tatler has decided to offer freelance writers an offer they cannot refuse - Condé Nast has very generously offered to pay invoices early, in return for a small reduction in the payment. Must be to cover all of the extra admin involved.
The government has ordered all large businesses to disclose information on payment practices as it seeks to crackdown on late payment culture. From April, all enterprises which meet the qualifying criteria face a statutory Duty to Report information including the average time taken to pay invoices and details of payment dispute protocols.
The reports, which must be submitted twice a year, will be published online, giving suppliers access to critical information on the payment practices of potential larger clients.