The FSB brings business together at Downing Street to tackle bad payment practices
The Federation of Small Businesses is taking the issue of late payment and supply chain bullying to a meeting at Number 10 Downing Street today. For the first time a number of leading businesses from the FTSE 350 and small businesses will come together with government and the Confederation of British Industry (CBI) to discuss the UK’s deteriorating payment culture.
The roundtable hosted by the Minister for Business and Enterprise Matthew Hancock MP will acknowledge the progress made in bringing issues around supply chains to light, and seek consensus on how to tackle the issue. The discussions will focus on the boundary between acceptable commercial negotiation, and the exploitation of suppliers. In addition, the meeting will explore some of the most problematic payment practices. The FSB has been working to raise the profile of many of these practices including flat fees, dubbed ‘pay to stay’, excessively long payment terms exceeding payment agreements, discounts for prompt payment and retrospective discounting.
Crucially the FSB will be looking to find consensus on how government, enforcers and business can best achieve the necessary culture change to address the UK’s poor payment culture. Small firms want to see the Prompt Payment Code strengthened, with signatories to both the PPC and the Prime Minister’s Supply Chain Finance initiative paying within 60 days unless specific conditions are met.
Recent FSB research revealed that almost one in five small businesses had been subject to some form of poor payment tactics. Five per cent had experienced the so called ‘pay to stay’ practice used by Premier Foods, who asked suppliers to pay a flat fee in order to be considered for future contracts.
John Allan, FSB national chairman, said: “Since the news around Premier foods poor payment terms came to light we have seen more evidence of supply chain bullying across the food processing industry as well as other sectors.
“We are finally beginning to see progress in highlighting poor payment practises with Government, opposition parties and big business recognising that something has to give. The issue will not go away by itself and we hope today’s meeting will lead to action to resolve the failing supply chain.
“If we look at late payment, it’s a massive problem for small businesses costing them tens of billions of pounds each year. If you are waiting for a payment from your biggest client, it means you can’t buy in new machinery, hire new staff or in some cases even pay your own employees. We know the Prompt Payment Code is currently not delivering, and we want to see a long term solution to deliver a better payment culture agreed upon.”