FSB calls for Small Business Commissioner later payments powers
Here’s what the government envisages the new role to do: “The Commissioner’s services will enable smaller firms to resolve disputes with other businesses quickly and easily. This will preserve important commercial relationships without the need to go to court.”
Sounds useful. But the Federation of Small Businesses (FSB) has called for the new Commissioner to have real teeth, especially with regard to late payment. Small Business Commissioner must have clout to tackle late payment, says FSB
John Allan of the FSB says:
“We are encouraged by the Government’s consultation process which will include businesses of all sizes. But it’s important to ensure that the new Commissioner has the confidence of the entire business community, a clear focus on tackling supply chain bullying, and sufficient powers to intervene and resolve late-payment disputes in a timely and effective way. The Commissioner will have a unique overview of patterns of bad practice in late payment culture and should have the ability to refer these to the Competition and Markets Authority if those practices are considered harmful to the working of the market.
“Recent FSB research found that only one in five (21%) of our members are confident the current Prompt Payment code will be enough to address the UK’s poor payment culture. In addition, the EU Late Payment Directive from March 2013 is simply being ignored by many large and multi-national companies to the detriment of small businesses and the sustainability of their supply chain.
“Late payment culture in a company is set at board level. It’s something that CEOs and board members in big businesses must take responsibility for and put at the top of their agendas. Big businesses must respect the supply chain and stop using smaller businesses as a credit line by delaying payments and applying bullying tactics.”
problems vary by industry
for instance stories of poor payment typically come from suppliers to big retail and the construction business
both have one thing in common – massive size difference twixt buyer and seller
certainly there are all sorts of fixes and penalties that can be applied – but my old (not necessarily very wise) head suspects that most good intentions can be dodged by the most determined bent buyer
one possibility is to introduce factoring – compulsory to the buyer but optional to the seller
this would at least guarantee a cash value at a certain time and allow the supplier to work out the real value of a supply contract
it would have to be involved at the negotiation stage
this would help those of us supplying the retail / wholesale distribution trades
the problems of the construction trade are more intractable – the illusion that the price of ‘being one of the lads’ involves verbal ‘contracts’ continues to undermine safer practice at the base of the transaction pyramid
the issue of ‘retentions’ still defies solution
again other question of the involvement of another party with a financial interest is tempting
view construction as separate
this army of egos manages to perennially underquote throughout the contracting process and yet be rated as dismally inefficient when compared with similar businesses abroad
something to do with sub-contracting?
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