It’s been a week of dire warning. Sadly, we are increasingly hearing about deteriorating mental health amongst small business owners. They tell us that not getting paid is one of the main issues keeping them awake at night. Worrying, sleeplessly, at 3 in the morning is where mental health problems start in many cases. There is a vast negative impact due to late and slow payments and other poor payment practices on people worrying about paying their own bills and wages and keeping the business going.
As if that weren’t bad enough, losing money through fraud and scams is an issue rapidly contributing to that lack of sleep. There are dire warnings that small businesses are increasingly suspectable.
These topics were top of the agenda at the Accounts Payable Association this week. People in Accounts Payable do the paying. That means they are at the end of the line from Procurement through reconciliations and approvals to payments. If you’re paying people, you’re susceptible to fraud and scams.
A lot of money is lost through internal fraud. That’s a tough one but preventable with good policies and processes followed to the letter. The scams are harder to prevent. When you’re under pressure to get the job done and the payments out, it’s easy to fall foul of the authentic looking email or the persuasive call that leads to sending money due to a supposedly new, but incorrect bank account.
Warnings were clear: never accept the emailer or the caller’s word for it that bank account details have changed. Go back to your supplier and check. Don’t use phone numbers given to you on emails or in calls. Talk to your contacts directly and check that phone numbers or bank account details really have changed. Check, check and check again and believe no one. All good ‘common sense’ stuff – but easy to forget when you’re too busy.
No one can afford to give away money to someone to whom it isn’t due. The company paying out loses and the potential to damage the relationship with the supplier who is waiting for money you think you’ve paid is huge. Their viability is also on the line because they’ve not been paid and that means they’re at risk and could be putting the whole supply chain at risk.
And that was this morning’s dire warning. A big housebuilder is saying that smaller contractors going bust is now a bigger threat to the supply chain than rampant inflation: “The greater supply chain risk is now that of contractor insolvency as the inflation cycle reverses and demand for construction services reduces.” There’s a bit of me that wants to say: I told you do – but I’m too nice to do that!
We also talked about the importance of supporting the supply chain at the APA event, and earlier in the week with some fairly big firms around the table. As a business journalist it was one of the ‘stickiest’ pieces of advice I heard in an interview (with Sir Philip Green): Whatever you do, do not break the supply chain. You can’t keep your customers happy if the supply chain breaks so it is all-important. That means helping by paying quicker and by not demanding long extended payment terms. It means helping your suppliers put good fraud and scam prevention in place, helping them with digital transformation and reaching Net Zero. It means sharing the information and policies and processes you have put in place with your smaller partners along the supply chain. It means better communications and information sharing, better onboarding and induction.
If we all pull together more effectively, we’ll have a better, more productive 2024. I ask you seriously how good are you at working in partnership with your smaller suppliers? Something to cogitate over the Christmas pudding.