One of the challenges of ensuring prompt payment is the commonly held perception of a divide between big and small businesses – that big brands are simply never going to pay on time. The Federation of Small Businesses and the Confederation of British Industry – the latter of which represents firms of all sizes –Read More
One of the challenges of ensuring prompt payment is the commonly held perception of a divide between big and small businesses – that big brands are simply never going to pay on time.
The Federation of Small Businesses and the Confederation of British Industry – the latter of which represents firms of all sizes – are now working to overcome this perception, by encouraging all companies to recognise the extent to which they depend on each other.
For SMEs, big-name clients help to establish a strong reputation, and often represent the lion’s share of day-to-day income, while for those big brands, smaller firms underpin the supply chain and can often drive innovation in niche areas.
Mike Cherry, policy director at the FSB, said: ” The business community is an ecosystem and entirely interdependent. We need to focus less on big versus small business, and more on how to encourage mutually productive relations and the journey from small to big.”
The organisations say that collaboration, regardless of company size – and including support from the government – will help to drive growth, create jobs, and increase investment in technology and in people.
In turn, competition and productivity will naturally rise, as will living standards and export levels, they say.
One of the most fundamental ways to collaborate effectively throughout any supply chain is simply to adopt a principle of prompt payment, and settle invoices by the agreed deadline 100% of the time, and even earlier where it is possible to do so.
Paying promptly creates a more positive working relationship between buyer and supplier; it supports investment and stock replenishment, keeping the supply chain healthy; and it avoids incurring unnecessary costs due to penalty fees and statutory interest.
By adopting effective credit control measures , companies of all sizes can help to take the first step towards prompt payment in their supply chain, and inspire equally efficient processes in others.
If you would like to talk to a member of our team about credit control or any of our other services please call 0808 159 7692