Friday afternoon, and a new tale of woe

Small Business Commissioner Liz Barclay hears from a distraught small business owner awaiting payment from a much bigger customer.

Customer: “We can’t pay because of internal processes”.

Supplier: “Just do BACS – takes a few seconds”

Customer: “Oh no… got to wait now until the next payment process, which is next Friday”

Supplier: “That will make it 14 days late. It’s £1,500. This delay is at the wrong time for us”

This is just plain wrong. This is a firm with a multi-million pound turnover, and payments have been regular until now.

This leaves a small firm in danger of not being able to pay employees and their own suppliers. This creates sleepless nights and mental ill health. How can a firm with millions in turnover not have the processes in place to avoid leaving vital suppliers at risk?

Suppliers to any customer are the talent and should be treated with respect, nurtured, and supported. If a small firm goes bust because of your behaviour, you have the expense and trouble of finding a replacement at a time when skills are in short supply.

Ask yourself these questions: Is this ethical behaviour? What damage would it do to your reputation if this got out in the local press? Why would any potential investor want to invest in a firm that doesn’t treat its suppliers fairly? Why would a potential employee want to take a job with you? If you treat your small suppliers this way, the chances are you’ll treat your employees badly too. If your daughter was running a small firm and one of her customers treated her like this, how would you react?

It’s been a long week and I’m cross on behalf of small firms, but sadly I’m not surprised. I’ve been in this job for 100 days today as I write, and little surprises me now. This was almost the nail in the coffin for this particular emailer to the OSBC.

Today’s late payment came on top of a delayed payment the previous month, when a different customer claimed not to understand how the supplier’s invoices worked. Despite having all the info that had been asked for the customer delayed. This is a stalling technique. They didn’t want to pay out the £4.5k owed.  It was eventually paid 10 days late and many big firms will fail to see the difference 10 days makes.

Ten days is enough to wipe out cash reserves and as the supplier says himself:

“That means I have to work even harder to build the reserves back up, so come January we don’t have this issue again. Both my business partner and I have said at different times we’re sick of it. Two steps forward, 3 steps back. Luckily I have built the pipeline up so I know we’ve get more than enough work coming in. The killer question is – when will we get paid?”

Most bigger firms don’t set out to pay late, or delay payments, and generally it seems that payment practices are improving. Late or delayed payments or long payments terms are unfair. You the customer are in effect in debt to your supplier, using the supplier’s money to fund your own business. If the payment is never made, that’s theft. Please, please stop behaving in this way to small suppliers.