FSB accuses big firms of abusing small businesses’ trust

Large companies are exploiting small businesses by delaying invoice payments and imposing new terms and settlement fees on owners, the Federation of Small Businesses (FSB) can reveal.

The FSB has unearthed evidence that big organisations are unashamedly making smaller firms wait over 100 days before getting paid, often changing terms and conditions with little notice.

In one example, the high street chain Alliance Boots wrote to its suppliers in June to inform them that, as of April 2008, bills would be paid up to 75 days from the end of the month of invoice with a 2.5% settlement fee.

There is existing legislation which allows small business owners to charge interest on late payments, but many are reluctant to use this for fear of losing contracts with big businesses on which they are often reliant.

John Wright, FSB National Chairman, said:

“Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result.

“Making small businesses wait 105 days for payment and charging them for the privilege of doing so is nothing short of outrageous.

“At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit.”

ENDS

Notes to Editors

1. The FSB has seen a letter from Alliance Boots detailing its new terms and conditions: 75 days after the end of the month in which invoices are received i.e. up to 105 days. For a copy of the letter and to speak with small business owners that have been affected, contact the FSB press office.

2. The Late Payment of Commercial Debts (Interest) Act 1998 enables a small business to charge interest at 8% above the existing base rate on debts due from large businesses. Many small businesses are afraid to use this legislation for fear of losing valuable contracts.

3. The FSB is part of the Payments Council, a group which aims to promote a better payment culture in the UK. For more information visit www.paymentscouncil.org.uk.

4. The FSB is Britain’s biggest business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Simon Briault: 020 7592 8128 / 07917 628998
Marc Shoffman: 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions