A new report published by debt collection and outsourced credit control specialists, My Credit Controllers Ltd, exposes unfair payment practices inflicted on smaller suppliers by some of the UK's largest businesses. The updated report now covers six months worth of data and submissions by more than 1,700 companies.
Concerned by the harm being done to small and medium sized enterprises (SMEs) by late payment, the government introduced new rules that mean large businesses must publishh information on how quickly they pay suppliers. The authors of the report have analysed submissions made in the first six months of the scheme covering companies with household names such as Boots, Carphone Warehouse, JD Wetherspoon and Center Parcs.
See the rankings of best and worst paying companies in the full report here
More troubling for the government is that the report shows that only 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 twenty worst paying companies were signatories of the governments Code, including one company that pays more than 90% of its invoices beyond the agreed terms, and another that takes nearly 90 days on average to pay suppliers.
Stuart Elmes, Director of My Credit Controllers and one of the reports authors said:
"Our analysis found that 8% of Prompt Payment Code signatories have an average payment time longer than 70 days, whereas only 4% of companies in the whole sample took this long to pay suppliers. It looks like the Prompt Payment 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. One 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 payment practice propagates down through the supply chain, as companies bear down on their own suppliers to offset payment pressures from 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.
How we can Help: