March 12 2018
A new report published by debt collection and outsourced credit control specialists, My Credit Controllers Ltd, lays bare the state of unfair payment practices inflicted on smaller suppliers by UK's largest businesses.
Concerned by the harmful effects of late payment on small and medium sized enterprises (SMEs), government introduced new regulations that require large businesses to submit details of their payment practices. The authors of the report have analysed submissions made in the first four months of the scheme covering the payment behaviour of nearly 800 large companies including household names such as Triumph Motorcycles, Sports Direct, JD Wetherspoon and Harpercollins.
See the full rankings of best and worst paying companies in the full report here
More troubling for the government is that the report shows that only 7.5% of large companies have signed up to its voluntary Prompt Payment Code, and that these companies are amongst the worst payers. Three out of the top ten worst paying companies were signatories of the governments Code, whereas none of the ten fastest paying companies had joined up.
Stuart Elmes, Director of My Credit Controllers and one of the reports authors said:
"Our analysis found that nearly a half of Prompt Payment Code signatories took more than six weeks to pay suppliers, while only a third of companies in the whole sample took this long. It looks like the Code is being used by some companies as a fig leaf to cover up a lack of meaningful action on this important issue."
Another controversial practice has been the extraction of payments from small suppliers just to remain on a suppliers list. Two percent of companies were found to have taken payment from suppliers in this way. Many of these were in the food industry, suggesting that even if the supermarkets have cleaned up their acts on this practice, other businesses in the sector have not.
Commenting on this finding, Elmes said:
"This clearly illustrates the way that poor payment practice propagates down through the supply chain, as companies bear down on their own suppliers to offset payment pressures from their powerful customers. Of course where it all ends is when it reaches the smallest businesses that do not have the scale to impose their own terms on suppliers. It is immoral that the least able to pay are being forced to help the finance directors of our largest companies flatter their balance sheets by giving them what amounts to interest free finance."
You can read the full report here.
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