Thursday, 14 March 2013

Fwd: Helping constituency businesses to tackle late payment

Dear Mr Jones,

It is widely acknowledged that many small businesses are experiencing cash flow difficulties at present. In part this is due to difficulties in accessing finance due to the amounts of security required by banks to lend. In part, it is due to low demand for services. In this context, the £37bn currently tied up in late payment has a tangible impact on the viability of those businesses.

For ten years the Forum of Private Business has run a Hall of Shame<> on our website, encouraging our members to let us know when customers are treating them unfairly. In the last year alone we have exposed 150% increases in payment times from Sainsbury's, a 75% increase from Unilever and an unfair, scaled interest charge on supply chain finance by Monsoon. Worryingly, this behaviour appears to be on the increase.

On March 16th a new EU Directive will encourage compensation to be applied to late invoices, something the Forum of Private Business has campaigned on for a long time. However, it will not be automatic and by applying the interest charge many businesses fear they will lose custom in the future. It is equally likely that customers will seek to adapt contractual payment terms to take account of this Directive. Businesses must be vigilant to prevent this from happening.

The Government and the opposition are already working alongside the Forum of Private Business to encourage more businesses to sign up to the Prompt Payment Code. However, it is clear the private sector itself can do more. The Forum of Private Business has a track history of taking positive actions to improve the business environment, rather than sitting on the sidelines.

On that basis and for the first time we are going to open up the Hall of Shame<> to non-members.

If you have constituency businesses that contact you about unfair payment terms, we encourage you to pass our details to them. We will investigate the claims and if correct we will name and shame those larger customers on our website.

Reputational damage to larger businesses should not be underestimated and only by exposing bad and unethical practices can we help to tackle the scourge of late payment. We hope you will encourage any businesses experiencing problems with late payment to get in contact.

For more information please email<> or encourage affected businesses to visit our Hall of Shame at Yours sincerely,
Alexander Jackman
Head of Policy
Forum of Private Business