back to article Small biz battered by late payments

British small and medium businesses are still struggling with late payments despite government promises to sort the issue out. Small and medium enterprises(SMEs) in the UK are owed a total of £30.4bn. That figure has jumped £11bn in the last two years. The average figure owed to small firms has actually fallen, but the number …

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  1. Anonymous Coward
    Anonymous Coward

    Worst payers are the biggest companies

    As a small business man, I find the worst payers are the bigger companies or the multi-millionaires on my books.

    Those of my clients with less cash, seem to be more keen to pay up as they know what it is like to be tight on cashflow.

    By far my biggest debts are owed by clients with the biggest mansions and posh cars. The people who probably carry the money they owe me as cash in their pockets.

  2. Richard 81

    @AC

    Doesn't surprise me. People with less money spend more time thinking about income and outgoings and avoiding late payments for fear of reprisal. People with loads of money care less about it and, frankly, the fact that they're so rich probably has something to do with their unwillingness to hand over what they owe.

  3. SoftwareTrainer

    Playing the system

    I work on a contract basis and have told clients that my terms are 30 days, my last contract they said that was no problem and it was only after I told them that their payment was late did they inform me that their policy was to pay on the last friday of the month, no matter when the invoice was dated or what the terms were.

    Does this effect the Late Payment Legislation? They have existing terms even if they do not tell their suppliers, and because they have a lot of money and prestige (they are solicitors that represent very important clients) they feel they can pay suppliers late.

    The Late Payment Legislation needs to have harsher consequences to these companies.

  4. jolenephillips

    Late Payers - Do you check their backgrounds

    Financial background checks should ALWAYS be performed before and during doing business with a company. It doesn't matter if you 'know' them, or recommended, do you still know if they have any CCJ's? or due to incurr any? They're unlikely to tell you.

    It is so cost effective now to monitor your clients.

    Think of that fire extinguisher in your office, its there just in case of a fire - What have you got in place for late payers? abnd they are your turnover!

    Follow me on Twitter jolenephillips to find out more, or call 029 20886500 ext 6668

  5. Frumious Bandersnatch

    Stubb's Gazette

    Whatever happened to that?

  6. Oflife
    Paris Hilton

    Fairly easy solution!...

    Ask for payment up front, or at least, enough of the total to cover your costs. We have been doing it for the last year and not one customer has questioned our policy. We earned their trust at the start by delivering to our first customer on time and the word go around.

    A small discount is a great incentive to your customers too.

    For some, we allowed them to pay in instalments - but did not deliver the product until the last payment cleared into our account. Trust is important here, but once you get going, things get easier.

    In a way, this is reversing the way things used to be done.

    Paris? Because she loves it up front!

    (Don't we all.)

  7. I didn't do IT.
    Alert

    @ Playing the system (Software Trainer)

    While it is very troubling that they pull stuff like that on you, any system works both ways.

    For example, point out to them that the invoice submitted on Sep 23 last week is now overdue by their policies, regardless of your normal invoice terms. :)

    I heartily agree that the larger a company is, the more they hold off payment. When you have millions sitting around for another 10-30 days, you would not believe the interest payments these companies are getting on these "payout" accounts!

  8. Anonymous Coward
    Dead Vulture

    @ Late Payers - Do you check their backgrounds

    Half a minute!

    Was that... Is that... It is! An advertisement in El Reg Comments?! For shame, Reg. tsk, tsk.

  9. Anonymous Coward
    Happy

    This has been the case since forever

    I remember being asked to chase up a customer who owed us money. Each month it was the same. "Oh you've just missed the payment run" or "Mr. Whatever is out". Eventually, as that particular system went out of fashion, and we needed some parts, one of them sold their system to us. We didn't pay very quickly either and finally I picked up the call from the customer I had never been able to speak to directly.

    I had great fun telling him that he had just missed the cheque run and that I would be advising Mr. Whomever the next time I saw him. I did point out that I'd tried to reach him several times previously and that sauce for the goose...

    Chortle.

    Regards

    Neil

  10. Anonymous Coward
    FAIL

    This isn't new

    This has been a problem for as long as there have been corporates that are "too important to fail".

    Instead of a true free market, where those that don't cut it are allowed to fail and be replaced by those that can, corporates are allowed to operate in a manner that guarantees their survival at the expense of small and medium sized business.

    Force corporates to pay within a reasonable period of time? Outrageous! If we did that rich, greedy CEOs might lose their jobs. How are corporations expected to pay for the goods and services they order? Surely the current system big business orders goods and services from smaller businesses, then delays and procrastinates payment for months or even years is the best way to go. That way, big business can effectively steal goods and services from the lesser, who will simply disappear as they are forced into bankruptcy.

    But here is the little glitch in the system. Those small businesses will order stock from companies, large and small. Because they haven't been paid for the goods and services they offer, neither will their suppliers. That means when a corporate deliberately waits for a small business to go under, they are affecting more than just one small business. How does the accumulated effect of seeing all the small businesses you sell stock to go bankrupt affect suppliers? How big are some of those suppliers? How many jobs are lost over the lifetime of one corporate? Now if you consider more or less every corporate in the UK doing the same, how many jobs are lost?

    Of course in a fair world laws would have been made decades ago that would force these corporates into paying their bills within 30 days. However good lobbying (what the rest of us calls bribery) means such laws will never see the light of day, and they even have a handy excuse on hand for their pet politicians. If we forced corporates into paying what they owe, they might go under and too many people would lose their jobs. The fact that these businesses are effectively stealing and driving many more people out of work than they employ themselves is something we can quietly ignore.

    So we allow corporates in the UK to be artificially sustained by theft from small and medium sized businesses, because we falsely believe that the cost of a corporate going under is more than the dozens of businesses they kill by their practices. It also means medium and large businesses that normally grow and fill the gap left in the market are forced to stagnate and possibly fail too.

  11. Paul 87

    Well...

    This is definately true, our company has pretty much given up on offering new credit accounts as our exsisting ones are taking longer and longer to pay. At present we've seen about a 50% rise in debt on our books and even previously good payers are taking longer and longer, and even when they do pay, it's often via credit rather than debit card.

  12. Anonymous Coward
    Anonymous Coward

    Neither a lender or a borrower be

    Labour encouraged snooping certainly doesn't solve the problem, but of course fits in well with their peeping tom strategy.

    The only way to avoid late payment is to charge at the point of delivery, and that should include employees as well, pay them at the end of the day, that will sort the Wellingtons from the Little Napoleons.

    It is not hard, and it is the system that is proven to work, keep your liability to a day of work, or never hand over the goods. And start putting the price up if you have to store, stop bending over for money, flip the coin over and start making them bend over for time or goods those are the things of real worth, not money.

    Don't fall into the trap of any credit terms, if they want something they pay for it, that is how it works.

    And, to get us out of this problem, any PLC should be forced to dilute the share holdings of their company and pay all outstanding debts immediately as shares with a 10% kicker on the price after dilution. That would kick start the economy and the markets, plus the incompetent in companies would soon be shown the door.

    And this should not be applied to tax debts, before the government gets some sneaky ideas, put that lot right at the bottom of the pile, they will have to wait for their chandeliers, tampons and moats.

  13. John Smith 19 Gold badge
    Happy

    AC@22:40

    "The only way to avoid late payment is to charge at the point of delivery, and that should include employees as well, pay them at the end of the day, that will sort the Wellingtons from the Little Napoleons"

    Fine words sir or madame.

    What sort of business is it that you run?

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