These businesses are caught in a catch-22 situation, as they cannot afford to bite the hand that feeds them.
Manchester (PRWEB UK) 8 March 2013
Small businesses can either stand up to big companies over delays in payments or accept being exploited, according to lending expert Phil Chesham.
He has used an article published on business website Find the Edge to draw attention to the impossible situation many SMEs find themselves in.
Chesham points out that positive change may be on the horizon, however, following an increase in the amount of pressure the government and guilty companies are facing over the issue.
A recent Telegraph newspaper and Forum of Private Business has seen the problem given extra exposure, and the government has been forced to take a stance.
Chesham said: "Business minister Michael Fallon has started talking tough against businesses accused of making late payments."
"This Telegraph article shows the minister has sent a letter to the chief executive of every company in the FTSE 350, proposing a voluntary agreement that encourages companies to commit to paying suppliers quickly. He has promised to name those who refuse to sign up to the agreement, which is likely to generate negative press for them."
Chesham is unsure whether this step will have the desired effect, however. He goes on to discuss new EU legislation that allows companies to add interest to unpaid debts, without having to give any notice.
This solution also has problems, however, as enforcing the legislation is likely to sour the business relationships many SMEs are reliant upon.
He said: "Further action, or regulation, is likely to be required because SMEs are ultimately left helpless. They could use the EU directive, but would almost certainly compromise their business by doing so. These businesses are caught in a catch-22 situation, as they cannot afford to bite the hand that feeds them."
Speaking about the article, founder of Find the Edge, Kenny Goodman said: "This is a real issue for many SMEs, and Phil explains the problem brilliantly. Greater awareness of these issues will hopefully bring about change in the near future, and resolve the problems that late supplier payments cause."
Phil Chesham has more than 20 years' worth of experience in the lending industry, and is the founder of Positive Cashflow, an invoice financing company. More about him can be found here: http://www.findtheedge.co.uk/expert-panelist/phil-chesham.
Find the Edge launched last month as a repository for business news, knowledge and insight. The site's mission is to give business leaders access to the insight they need to gain a competitive edge over their competitors.
The full article can be read here: http://www.findtheedge.co.uk/finance/funding-lending/time-for-action-on-late-payments.