The UK’s top 100 FTSE companies are being urged to pay their suppliers on time and in full in the latest in a series of initiatives to tackle late payment – but can business owners themselves do more to minimise the problem?
The Forum is backing a campaign from the Oldham and Saddleworth MP Debbie Abrahams to get big businesses to sign up to the code, which was drawn up by the Institute of Credit Management (ICM) but has secured signatures from just a quarter of FTSE 100 companies.
The campaign was launched in Oldham yesterday by Debbie and several organisations including the Forum and ICM. The chief executives of FTSE-100 companies that have not signed will receive a letter requesting them to do so.
Targeting big businesses at the top of the supply chain is clearly an important step. It is vital that they understand what is at stake: squeezing suppliers in this way forces firms to go under, threatening the prospects of economic recovery and growth driven by small businesses and entrepreneurship. It is also good for their businesses – fewer suppliers ultimately means less choice for consumers.
We have been at the forefront of lobbying against this most destructive practice, which is all-too-often part-and-parcel of the culture of doing business.
Following our call to action involving a number of leading trade bodies the Business Minister, Mark Prisk, has re-established the Government’s Late Payment Working Group, and we held a round table event in the House of Commons recently in which the findings of our cash flow management research, carried out with the credit reference agency Graydon UK, were discussed and ways forward suggested.
While focusing on the big boys at the top of the supply chain has to be a priority, the primary outcome of early discussions has been ways of helping business owners to help themselves. The research found that far too few put in place regular, standardised cash flow management procedures to tackle late payment and rely instead on ad-hoc measures, usually when it has snowballed to become a massive problem.
Yet those who do embrace even simple steps such as invoicing properly and on time, develop relationships with their customers’ payroll departments and are not afraid to chase payments – or use legislation to charge interest on late payment when necessary – find it much less of an issue.
Perhaps the real question should be: how do we get this message across so that more entrepreneurs are being proactive? Answers on a postcard…