In the current economic downturn, it is increasingly common for big companies to delay payments to smaller suppliers and use bullying tactics to legitimise such practice.
While we can lobby these big companies to restrain from late payment, it is the smaller suppliers that actually hold the power to stop it happening.
The question is: what type of business do you want to be? One that holds on to its values and sticks to the principle of fair payment in order to weather the current storm? Or one that goes bust as a result of trying to manage an impossible cashflow situation?
The Fair Payment Campaign launched by NSCC last year gives SMEs within the supply chain the ability to achieve certainty of payment, 30-day payment terms, and the end of cash retentions.
And we can't let the progress made so far slip away at a time when fair payment is more important than ever. We need to test the resolve of the government's commitment to fair payment throughout the supply chain. If all businesses that want to realise fair payment practices stand firm, they will be much better placed when the market recovers.
The SMEs that make up the supply chain are the construction industry. Without their skills, knowledge and workforce, there is no industry and we should not forget that when it comes to payment.
For guidance, practical tools and tips for getting paid on time, visit the NSCC's dedicated website.
Suzannah Nichol MBE
Chief executive
NSCC
Comments (3)
In today’s climate, it is becoming increasingly common for larger companies to delay payments to their smaller suppliers in a bid to protect their own cashflow.
These smaller companies are therefore frequently the ones being punished for the worsening economic conditions.
While lobbying your customers and the government for earlier payment terms may help in the long-term, it is the short-term that is the most important time to protect your business, and the most important attribute of any company is its cashflow. Yet it is cashflow that is most vulnerable and easily hindered by delayed payments.
A proactive approach must be employed to overcome working capital shortages. One such method of doing so is by using invoice finance.
Both invoice discounting and factoring can release a high portion of the value of an invoice within 24 hours of its issue, and asset based lending releases cash against your assets on the balance sheet to provide the funding essential for your company to survive and ultimately grow.
While recourse invoice discounting and factoring is commonly used, the non-recourse option transfers the risk of non-payment to the lender, subject to you operating to designated credit limits.
Although this approach is usually more expensive than recourse invoice finance, it provides a shield of cover, making it more beneficial should a customer default or enter insolvency – something that is increasingly familiar today. In such a case, with a non-recourse facility you could receive up to 100% of the net invoice value.
With over 11 years’ experience in providing working capital solutions to SMEs, Hilton-Baird Financial Solutions can identify the solutions that are tailored to your company’s individual needs.
Visit www.hiltonbaird.co.uk for more details.
Posted by Evette Orams, Director, Hilton-Baird Financial Solutions | November 11, 2008 12:28 PM
Posted on November 11, 2008 12:28
stay in and keep the door shut
Posted by jason kenny | January 16, 2009 7:23 AM
Posted on January 16, 2009 07:23
Yes, i beleive that 'factoring' can help a lot of companies. To start with, it frees you up to concentrate on more productive issues instead of spending your time chasing payments. Administratively, it’s also a better option than arranging an overdraft with your bank. As your company grows, so does the available funding.
Posted by Invoice Factoring | March 30, 2009 3:13 PM
Posted on March 30, 2009 15:13