The Federation of Small Businesses (FSB) has attacked large companies that delay invoice payment and impose new terms and settlement fees on small businesses.
The recent post about Alliance Boots has led to the FSB obtaining a copy of the letter that was sent out to the companies suppliers in June.
The letter states that as of April 2008 bills will be paid 75 days from the end of the month of invoice with a 2.5% settlement fee.
In other words between 75 and 105 days after you have raised your invoice, the bill will be paid, with a 2.5% discount for the privilege of dealing with our enormous organisation!
John Wright, FSB National Chairman, said:
“Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result.
“Making small businesses wait 105 days for payment and charging them for the privilege of doing so is nothing short of outrageous.
“At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit.”
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3 comments so far
1 THE SMALL BUSINESS BLOG » Blog Archive » UK/Ireland Small Businerss NEws Round-up - 01/08/2008 // Aug 1, 2008 at 12:06 pm
[...] FSB Attack Late Payment Large Companies: The Federation of Small Businesses (FSB) has attacked large companies that delay invoice payment and impose new terms and settlement fees on small businesses. [...]
2 Jim from Just Accountants // Aug 14, 2008 at 8:10 pm
Sharp practise from large companies is nothing new, but this is outrageous.
It is down to the supplier to set payment terms - it isn’t a decision that clients should be allowed to dictate. However, when dealing with huge firms, this is easier said than done.
Bottom line, though: any company can be put into bankruptcy if they owe more than £750 - it doesn’t matter whether they are a multinational or not.
Playing hardball isn’t exactly ideal, but the embarrassment of potential bankruptcy action plus, of course, the potential for this to leak to the national press certainly evens the playing field.
3 Smart Factoring Quotes // Aug 24, 2010 at 7:40 am
Unfortunately it is just a fact of life. There are plenty of suppliers who will step in to fill the void if a small business refuses to accept the terms. Cash rich businesses such as the supermarkets are perhaps the worst offenders as they have no excuse not to pay on shorter credit terms.