Small business commissioner slams Bombardier's payment practices

The UK's small business commissioner has been scathing in its assessment of the payment processes of railway manufacturer, Bombardier Transportation UK.

Investigated after catering supplier, Alistair Hugo Catering and Events, complained it had not been paid for four invoices totalling £5,600.24, small business commissioner, Philip King slammed Bombardier for “exploiting” its supply chain, failing to ‘continually follow their own procurement governance process’, and for being unable to reconcile invoices against purchase orders.

Payment was only made upon intervention of the commissioner, despite several attempts being made by the small business. The oldest invoice paid was 223 days late. 

The commissioner found Bombardier’s internal systems and processes had broken down and proved to be too reliant on individuals. King also said the company was unable to always identify which individuals were responsible for ensuring payments were made.

Bombardier has accepted the late payment complaint and has also acknowledged the failure of its internal systems.

But while Bombardier claims the failure is not typical, the commissioner disagreed, saying its own mandatory payment practice reporting (PPR) data reveals Bombardier pays 61% of its suppliers outside of payment terms, taking an average of 116 days to settle an invoice. King said: “The numbers speak for themselves and they are simply unacceptable.” 

He added: “Large businesses must consider the impact they have on their supply chain. Their actions must match their words. We need to see a fundamental change in behaviour. I expect to see better payment behaviour exercised by a global leader in the transportation industry and I am eager to see how Bombardier will turn this around.”

Bombardier has now agreed to review its payment practices and will report back to the commissioner within 60 days.

But Mike Cherry, chairman of the Federation of Small Business (FSB) called the evidence against Bombardier “a damning rap sheet of persistent and harmful late and non-payments”. 

He said other big businesses using “their dominant position to bully small suppliers” were on borrowed time, and he urged SMEs experiencing late payment issues to contact the Commissioner.

A spokesperson from Bombardier said: "We agree that in this case our usually robust internal systems have not worked as they should, but we believe that the events in question were unusual.

"Bombardier takes its obligations towards its suppliers very seriously and we are committed to continually improving our payment practices. We will carefully review our purchase order and invoice processes in the light of the commissioner’s recommendations and take all necessary steps to ensure this case remains a one-off.”

The commissioner was first set up by the government in 2017, specifically to look at poor payment practices.

Malcolm Harrison, group CEO at CIPS, said: “Large organisations are prone to complexities relating to sign-off procedures, volumes of payments, with staff not always aware of their responsibilities to make payments happen on time.

“There is some indication that this might have been the case for Bombardier, so this public reprimand may be the prompt needed to look at their procedures with a fine toothcomb and develop more responsible practices.”

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