Commenting on news that small to medium-sized enterprises (SMEs) are owed £33.6bn in late payments, the FSB’s Andrew Crane told FoodManufacture.co.uk: “It is absolutely shocking.”
Late payments force firms which are owed money to shed staff unnecessarily, he added.
“The biggest businesses are often the worst offenders in terms of not paying their suppliers promptly,” he said. “Some are sitting on piles of cash, because they slashed overheads during the recession and yet they … obviously use late payment as a tactic to spread overheads.”
For more information about the opportunities and challenges affecting SME food and beverage manufacturers, book your free place at Food Manufacture’s SME Business Leaders' Round Table. The half-day event will take place at legal specialist Eversheds’ Leeds office on November 29. Click here for more details.
Meanwhile, without singling out supermarkets for criticism, Crane said they had both a moral and social responsibility to pay their suppliers promptly. “We know examples of best practise, such as Asda, where subcontractors are paid on time. Everybody in food and beverage manufacturing should deploy best practise and pay promptly,” he said.
Earlier this week, payment firm Bacs reported a 10% rise in late payments to SMEs; the highest since records began in 2007.
Half of the UK’s 861,000 SME firms suffer late payments. The average debt owed to SMEs is £39,000 with payment delayed by an average of two months.
Mike Hutchinson, Bacs head of marketing, said: "The issue of late payment is continuing to get worse for SMEs in the UK at a time when they need to be able to plan ahead for growth and ensure a strong cash flow."
He confirmed that the worst offenders for paying late were large firms, which accounted for 48% of SME late payment debt. Public and private companies are responsible for 20% of late payments.
The best payers were government and not-for-profit organisations which accounted for only 9% of late payments.
Owed £16.6bn, retail and distribution SMEs are the most severely affected by overdue payments.
A host of topics directly affecting the profitability of SMEs firms will be discussed at Food Manufacture’s free Business Leaders' Round Table. To take place at Eversheds’ Leeds office on November 29, the event is free to attend for UK food and beverage manufacturers.
For more information, click here, telephone 01293 610231 or email email@example.com.