4,000 suppliers go bust over late payment

2 September 2009

03 September 2009

Around 4,000 small suppliers were forced out of business last year as a result of late payment, research by the Federation of Small Businesses (FSB) has revealed.

The FSB said a third of its 215,000 members are waiting longer to be paid during the downturn. Several large, well-known firms have been highlighted as the worst offenders, forcing small suppliers to wait up to four months for money.

As well as extending their payment terms, some big brand names are now charging a fee for settling up within the minimum period, the FSB said.

The research criticised Carlsberg UK, which last month extended the time it takes to pay suppliers from 62 days to 95 days. Carlsberg said suppliers could dispute the terms if they wish (Web news, 14 August).

John Wright, national chairman at the FSB, said: "Poor payment practices in both the public and private sector can drastically affect cash-flow for small firms at a time when business owners are doing their best to hold on to precious funds.

"Larger organisations must be given a loud and clear message that they must stop using the recession as an excuse to use small firms as a source of credit."

The FSB raised the "plague" of late payment with politicians and business leaders at an economic summit in London yesterday, in a bid to encourage businesses to sign up to the government-backed Prompt Payment Code.

SMsep2009

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