For many small businesses winning a contract with a large supplier is a huge achievement. You think you’ve finally made it, you’re doing business with the ‘big players’ and now you can really start to make some money and grow your business.
The possibilities seem endless because it’s the beginning of a new phase for your small business. Unfortunately for some, this dream is short lived and never becomes a reality. Instead, you’re lying awake at night worrying about how you are going to pay wages and your bills because you haven’t been paid for the work that you’ve delivered.
Since my appointment, I have spoken to around 1,500 SME businesses. Many convey the same message that they would prefer a bad relationship with a large supplier than no relationship at all. With opportunity comes risk, but that does not mean it is right for larger businesses to consistently pay late.
My role as the UK’s small business commissioner
My role is to help to tackle the culture of paying late, and to take on small business complaints about late payment by their larger customers. I also hope to build confidence so that small businesses feel they can challenge their larger business clients about late payment.
Holland & Barrett: They deserved to be shamed for their actions
This week I used the powers available to me to ‘name and shame’ high street giant, Holland & Barrett after they paid their small supplier 37 days outside of its contractual agreement of 30 days, for a £15,000 invoice.
Holland & Barrett like to portray themselves to consumers as an ethical business. I would expect a company which valued its ethical products to maintain standards across its relations with both its consumers and the business’ supply chain.
Holland & Barrett’s published payment data shows they took an average of 68 days to pay their invoices and 60% of invoices were not paid within agreed terms. This is a real issue for small businesses that depend on contracts with the big high street businesses for their livelihood.
Since the publication of my report, Holland & Barrett have agreed to work with me to improve their payment practices, particularly for small suppliers.
This is a positive step which has the potential to help a lot of Holland & Barrett suppliers. I intend to publish an update to my findings by the end of the year and would welcome any evidence from existing or prospective suppliers on Holland & Barrett’s payment practices.
Amplifying the late payments conversation for SMEs
I hope that by publicly revealing the persistent poor payment behaviour of big businesses we will start to tackle the imbalance of power and bring about the cultural change that is desperately needed.
I not only want to highlight bad practice but also showcase ethical payment. This is a watershed moment and I hope that small businesses will feel more confident in coming forward and opening up about the poor payment practices they face.
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