The level of late payment by major companies is reaching
epidemic proportions, according to Business Voice WM.
Now it is to mount a push to persuade big business and public
bodies to sign up to the Government's Prompt Payment Code.
David Caro, the Federation of Small Businesses' West Midlands
policy unit chairman and Business Voice WM board member, wants to
see more offenders named and shamed.
The FSB has highlighted a number of examples of 'poor practice'
including:
• Delivery firm TNT, food producer Bernard Matthews and
catering company Compass Group have all told small firms to wait 60
days for invoices to be paid.
• Builder supplies firm Jewson has done the same and is
also charging a ten per cent settlement fee as a discount for
paying within the 60-day period.
• Shopping website Amazon has extended its payment terms to
90 days with a two per cent settlement fee if paid in that time or
120 days without one.
• Courier company DHL is charging three per cent for paying
invoices on time.
• Brewer Carlsberg has changed its payment terms to 95 days
from the end of the month of invoice, which could leave a small
business owner waiting a total of 135 days for a bill to be
paid.
Mr Caro said: "These are outrageous and unacceptable demands,
which are doing great harm to suppliers.
"Companies like these, however large they are, need to be
exposed so the public have a clear choice - would they prefer
dealing with reputable firms or those whose behaviour is deeply
flawed?
"The obvious solution is for all companies and organisations to
pay their invoices promptly and in accordance with their stated
payment terms and for the practice of using small suppliers as a
cheap source of credit to be outlawed.
"Companies House needs to be given more powers to name, shame
and fine those companies who do not conform."
BVWM plans to contact the West Midlands' biggest companies
asking them to sign the Prompt Payment Code, participate in
associated media and publicity activity surrounding it, and set an
example to others. The Department for Business, Innovation and
Skills has been pushing for public and private sector organisations
to follow suit.
BVWM also intends to lobby regional economic forums so that
prompt payment remains a priority; pressure all NHS, regional
agencies and local authorities to fall into line; and challenge
public bodies to ensure their key suppliers are signed up to the
code and that they in turn are meeting their contractual terms to
pay their sub-contractors on time.
But there is concern at duplication - regional development
agency Advantage West Midlands also has a code. The '10 day pledge'
currently has 73 public sector bodies committed.
"The two schemes may be causing confusion and the value of
having both should be considered," cautioned Mr Caro.
According to the Banker's Automated Clearing Services (BACs)
outstanding payments to Britain's SMEs tops £30 billion, up
£18.6 billion on 2008. The average amount owed to an SME at
any one time is £28,000. One million SMEs are experiencing
payment delays compared with 684,000 last year.
SMEs in the Midlands are seeing the largest late payment bill -
£12.6 billion, an increase of 29 per cent. Midland companies
are owed an average of £41,000.