SMEs should stand up to the large business bullies

Small businesses are being bullied by their much larger competitors when it comes to making late payments for amounts due…

As a member of the Federation of Small Businesses (FSB), its always interesting to catch up on their various campaigns and news.

An press release from last week caught my eye - it seemed particularly relevant to tutor2u given some of our experiences recently.

According to the FSB, large companies are exploiting small businesses by delaying invoice payments and imposing new terms and settlement fees on owners.

The FSB has unearthed evidence that large firms are making smaller firms wait over 100 days before getting paid. In one example, the FSB claim that high street chain Alliance Boots wrote to its suppliers in January 2008 to inform them that, as of April 2008, bills would be paid up to 75 days from the end of the month of invoice with a 2.5% settlement fee. That effectively means Alliance Boots taking at least 100 days credit - the time between the invoice being sent out and the cash clearing the bank account of the supplier.

There is existing legislation which allows small business owners to charge interest on late payments, but many are reluctant to use this for fear of losing contracts with big businesses on which they are often reliant.

I’m not surprised to hear of the continued problem of late payment, but its a shame that it is the larger businesses that seem particularly keen to play the game of extending credit well beyond an acceptable period.

Delayed payments from customers is a serious problem for many small businesses, and tutor2u is certainly not immune. We have many schools and colleges that still haven’t paid us for resources sent in 2006, 2007 and early 2008, despite numerous requests. Maybe its time for tutor2u, along with other FSB members to start getting much tougher with the customers who buy things on credit but are reluctant to part with the cash…