The FSB says that, in recent weeks, the position has worsened to such an extent that the Chairman of the FSB, John Wright, described this abuse of power by big companies as “nothing short of outrageous”.

The FSB comments that many of their members are afraid to take on big businesses and insist on payment being made on the contractually agreed dates.

For a small business, this is, of course, potentially disastrous. Not only are they having to wait longer for payment for goods and services they have supplied, but it is more difficult for them to obtain support from their bank whilst they await payment.

Russ Davies, head of Commercial Litigation and Debt Recovery at leading East Midlands law firm, Smith Partnership, commented that many businesses feel they have no choice but to accept this practice. This is not, however, the case.

“If small businesses take time at the outset of a relationship to make sure that they have a proper set of terms and conditions applying to the contract, then they can insist on payment at the right time. If payment is not made by the due date, then there are actions which a small business can take to collect interest under the Late Payment of Commercial Debt Regulations.”
Whilst some businesses are reluctant to exercise their rights in this way, for fear of upsetting their largest customers, if businesses cannot afford these extended credit terms, then they need to take action to protect their position.

“Smith Partnership offer en excellent debt recovery service with on-line access to our system, allowing clients to view the progress of their matter 24 hours a day. However, one of the things we always endeavour to do is understand the client’s business, and make sure that they have effective processes in place to protect their interests.” commented Russ Davies.

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