This week I am writing to a number of individual businesses that are displaying the worst examples of payment practice by issuing standard communications to their entire supplier base advising that payments are going to be delayed or stopped. At this time of national crisis, every business is facing extraordinary pressure on cashflow. Although I understand the need to make commercial decisions in mitigation, I am concerned that this action will damage the supply chain, the economy and the reputation of their own business.
I am also writing to a number of businesses that are showing leadership by ensuring their smallest suppliers’ invoices are paid more quickly and, in some cases, immediately. I want to recognise the steps they are taking and thank them on behalf of small businesses across the UK.
This is a time for collaborating with business partners rather than confronting them. Tough decisions will of course, need to be made but they should be in a spirit of communication and cooperation. A delayed payment to a small or micro business will help ease the pressure on your cashflow but for the business owner not receiving a relatively small payment, it may be the difference between putting food on the table or not. It can also have a huge impact on well-being and mental health. I ask you to consider the human impact of your actions rather than seeing them simply as transactions.
My plea to you as a business leader is to prioritise your small suppliers and pay them as normal but, at the very least, I urge you to ensure individual conversations take place with them, so the impact of your actions is fully understood. Decisions taken in that spirit will allow for exceptions to be made and the worst consequences to be avoided.
Mike Cherry, National Chairman, Federation of Small Business said: “The power to help overcome the sudden loss of cash, brought on by the Coronavirus outbreak, lies with other businesses and their ability to speed up payments to keep the cash flowing. I cannot think of a more desperate time when this business-to-business support has been needed more than ever. In the face of this national emergency we are seeing some businesses stepping up to keep their suppliers cash flow healthy and in business. We need more to do the same.”
Ian Cass, Managing Director, The Forum of Private Business said: “The Small Business Commissioners call for the business community to work together, communicate and to think of others, both below and above them in the supply chains is a welcome one. At difficult times like these it’s easy to be selfish and just think only of ourselves, but the sign of a truly healthy economy is one where we work together as a true business community, one which makes sure as many businesses as possible survive and can thrive in the future!”
Emma Jones, Founder, Enterprise Nation: “If all businesses took this approach to switch off or delay all payments without understanding the impact it might have on the individual businesses in their supply chain, it would be incredibly dangerous for us all – and for the small business community in particular.
“At the moment we’re in a position where financial support is in place, but it’s not there yet and may not be for some time. Every business and every individual must play their part and act responsibly if we are going to get through this in the best shape possible.”