At Commercial Domestic Investigations we know how late payment can have an instant negative impact on an SME’s cash flow, and we are always keen to keep a lookout for news surrounding any improvement on the situation.
This week we learnt that MP’s will probe the growing problem of late payments to small suppliers, days after it emerged that Waitrose was taking three times longer than Tesco to pay many of its bills.
Suppliers, which are largely SMEs, have struggled to recover from the financial crisis. This was when many of their customers pushed down costs and lengthened payment schedules to protect their squeezed profits. According to market research group Experian, between the second quarter of 2014 and 2015 the percentage of SMEs waiting more than 30 days for payment soared from 42 per cent to 51 per cent.
One leading Conservative MP, Alok Sharma, has secured what is known as a Westminster Hall debate on the issue. These debates give MPs time to discuss what they consider to be significant emerging issues. Mr. Sharma (who is also an aide to the Chancellor of the Duchy of Lancaster, Oliver Letwin) is concerned by a Federation of Small Business survey that showed more than half its members were paid late when invoicing larger businesses. The organisation also revealed that payment terms for some SMEs have been extended to as much as four months, which could have a potentially crippling financial effect on them.
Mr. Sharma said of the “completely unacceptable” situation: “Late payments by larger businesses continue to be a major headache for SMEs, affecting negatively both their profitability and growth.
“I welcome Government plans to establish a small business commissioner and the requirement by large companies to publish their payment practices twice a year. But alongside legislation we need to see a culture change in how some big businesses behave towards smaller suppliers and I would be interested to see a register, or a TripAdvisor-type website, established which allows SMEs to highlight poor payment practice or predatory corporate behaviour by large companies. Late payment practices are clearly holding back GDP growth and they need to stop right now.”
It emerged this month that Waitrose is looking into ways it can speed up and simplify its payments to its smallest suppliers after discovering that processing invoices was taking as long as 45 days. Tesco has also looked to cut its payment times, which we have previously discussed, promising smaller suppliers delivering up to £100,000 of products a year that they would be paid within two weeks.
If your business is suffering with unpaid invoices contact Commercial Domestic Investigations for an informal chat about the services we can offer. Our team have the experience and knowledge to help your company recover money owed. Working with our debt collection team gives business owners the peace of mind needed to move forward and get past negative cash flow.
About Commercial Domestic Investigations
Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.
Commercial Domestic Investigations have recently featured in the press in The Guardian. To keep up to date with the latest debt collection news make sure to follow Commercial Domestic Investigations on Twitter and LinkedIn.
We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.