Thought Leadership – Rob Hubbard

Why Fair Payment Matters

Paying suppliers fairly comes with a number of advantages. When suppliers see that you are as good as your word, they will trust you more. They will be happier in their work, so will perform better and as we have consistently experienced, they will be more motivated to do an excellent job for you. If you are treating suppliers unfairly, they will be unlikely to go the extra mile for you when you need them to. This lack of flexibility makes your business less resilient. They will also very likely charge you more, to make up for the expense (and stress) of chasing payments, which can be considerable.

It’s important to remember that suppliers often have even smaller suppliers of their own. If you’ve ever run an SME, you’ll know that cashflow is everything and can be existential. Creating stability in the extended supply chain by paying on time, especially if you are a big end-customer, is good for everyone and will lead to confidence and economic growth. If parts of the supply chain fail through poor payment practices, the knock-on effect will eventually impact the big players’ bottom lines.

Having been signatories to the Prompt Payment Code for years, we were really pleased to see a renewed focus on it with the launch of the Fair Payment Code. 99.9% of UK businesses are SMEs and it’s particularly vital that they are allowed to function well by being paid fairly and on time. No one company operates alone – UK business is an ecosystem. By adopting a more systems-thinking approach and treating suppliers fairly, we can ensure that everyone flourishes, and growth is strengthened.

Written by Rob Hubbard CEO of LAS (Learning Age Solutions).