As you know from last month’s column, I’m four-square behind government plans to ‘name and shame’ persistent late payers. It’s a disgrace that companies can get away with paying weeks and even months late without being subject to any serious penalty. News that the government-backed Prompt Payment scheme appears to have failed is the latest blow to businesses that are, in many cases, being forced under – or very close to the wall - by their debtors.
A YouGov survey says that as many as 85% of small and medium have recently experienced late payment problems. These cases highlight the very real plight of business owners who are struggling with cash flow problems. I would certainly boycott businesses that are listed on a ‘name and shame’ register!
We commissioned a poll to find out how many business owners would consider boycotting a business listed on a late payers’ ‘wall of shame’. I can now reveal that a whopping 70% of people would consider giving such businesses the cold shoulder. The research conducted by Dipsticks Research asked a sample of 300 people the question: “Would you consider boycotting a large business that fails to promptly pay its suppliers which are small businesses?” Thirty three per cent of respondents would definitely consider a boycott, while a further 40.9% say they would possibly consider it.
I’m delighted that the majority would consider a boycott. Far too many clients come to me while wrestling with cash flow problems that are causing major problems for the effective functioning of their businesses. Too many late payers are bigger businesses that do not understand the very real problems that can cause businesses to go under.
It’s time that bigger businesses in particular are named and shamed. Setting realistic payment terms can be a good first option for many businesses. I’d also recommend reducing credit terms from 60 days to seven days. If all else fails, and you feel you can burn your bridges with the client, then think about charging interest for every day of late payment. A letter from your accountant or solicitor can also be a huge help in prompting payment. These options are really only for times where you find yourself drinking in the last chance saloon, however.
A boycott, either government backed, or supported by people - or small business - power, can still be the best way forward!