For the first time the Federation of Small Businesses (FSB) has assembled a cross-party group of MPs to stop come companies enforcing “unfair and unreasonable” payment practises in the UK.
Mike Cherry, national policy chairman at the FSB, said the money outstanding in late payments – caused by what has been described as a kind of supply chain bullying – is now in the billions of pounds.
He said: “It has consistently grown larger and larger. We need greater leadership from all parties competing to be in the next government to toughen up the prompt payment code and improve the UK’s payment culture.
“It is simply unacceptable for any company to exploit its market position to enforce unfair and unreasonable payment terms.”
The FSB believes that 20 per cent of smaller businesses may have been subjected to some type of payment-delaying tactic.
In a survey of 2,539 members, five per cent of suppliers said they were forced to pay a fee in order to be considered for any future deals.
Debbie Abrahams, Labour MP for Oldham East and Saddleworth, chaired the inquiry, co-hosting with the FSB and the All-Party Parliamentary Group for Small Business.
She said: “Late payment is something that CEOs and board members in big businesses can influence and I have always maintained that a late payment culture in a company is set at board level.
“That makes it a leadership issue, and it’s time that deliberately paying late, finding ways to pay late, or making unilateral changes to pre-agreed contracts is seen as being as unethical as tax evasion.”
She added that politicians must work to change business culture and make it unacceptable to pay contractors late. One way to do this might be to shift the burden of taking legal action from victimised smaller businesses.
FSB’s Mike Cherry added: “No one should expect to wait four months to get paid.
“Too many large companies and their respected household brands are abusing their suppliers. The attitude of these businesses towards their suppliers has to change.”