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We act for many smaller businesses and are finding the late payment culture is not an exclusive of high street retail corporate's. They would never allow you to take goods out of one of their store on credit and are simply using their suppliers as substitute banks. It's cheaper for them to stretch payments times than borrow even at the current low rates.

We act for many smaller businesses and are finding the late payment culture is not an exclusive of high street retail corporate's. They would never allow you to take goods out of one of their store on credit and are simply using their suppliers as substitute banks. It's cheaper for them to stretch payments times than borrow even at the current low rates.

Can we change the culture?

Corporates not only pressurise suppliers to cut costs but also to give extended credit terms. This will only change if all suppliers acted in concert to establish more honourable payment terms but I'm afraid the likelihood of this happening is unrealistic.  So naming and shaming in the hope of consumer pressure to improve payment terms seems the only way.

Although goverment has issued payment guidelines for larger players and many have agreed to abide by these but very few actually pay within 30 let alone 60 days.

The more corporates stretch payment terms the more this practice cascades down the supplier chain and we are seeing this increasing as the economy improves.  We constantly hear the payment excuse of I can't pay until I have been paid.

We always recommend that businesses agree payment terms with their clients at the time of an order.  Then both parties know the ground rules regarding payment and a confirmation in writing will stop any arguments should you need to chase payment. This will help your credit controller.

 

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