One-in-five SMEs subjected to supply chain 'bullying'

There is concern among the small business community with a survey of Federation of Small Businesses (FSB) members revealing almost one-in-five (17 per cent) of SMEs are subjected to ‘supply chain bullying’ in one form or another in the last two years.

The study of 2,5000 FSB members indicates a serious deterioration of payment practices that go beyond ‘pay to stay’, when a company demands that suppliers pay a fee to continue doing business.

As a result of the survey, the FSB created a list of the five most resented payment practices in use across the UK at present, including:

 

• ‘Pay to stay’ measures

• Excessively long payment terms

• Exceeding payment agreements

The FSB is subsequently calling for revisions to the Prompt Payment Code, as well as fresh measures to stamp out bad practice such as retrospective discounting and the ‘pay to stay’ culture.

Potential new measures include companies having to extend the government’s standard 30-day prompt payment terms to public sector suppliers.

Meanwhile, small firms want 60-day payment terms to be set as an absolute maximum for any business that’s agreed to co-operate with the Prompt Payment Code.

John Allan, national chairman, FSB, said: “The Government has indicated that they are prepared to do more to improve the culture of payment practices in the UK and they are right to do so.

“The sense I get from talking to our members is that small businesses are fast approaching the breaking point.

“They are no longer prepared to put up with these sharp practices.

“Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.”

Date published 16 Dec 2014 | Last updated 16 Dec 2014