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Why a company should pay suppliers quickly

Pay suppliers quickly. Impact Score.

In our survey 76% of people cared wanted businesses to pay suppliers quickly, but why? Because if they pay suppliers quickly, their cash flow is stable. And the success of our small and medium sized businesses (SMEs) is key to the stability of the UK’s finances and employment in our societies.

Did you know, according to the Federation of Small Businesses:

  • There are over 6 million SMEs in the UK
  • They are employing nearly 17 million people (61% of total employees)
  • £1 in every £2 spent is with an SME

Don’t let the big boys treat SMEs badly

If ‘big-business’ treats its smaller suppliers badly, then SMEs are at risk.  And as big businesses are finding trading difficult due to the current conditions, it is important consumers do not allow them to pass this hardship down to their smaller suppliers. Here’s some examples or good and bad behaviour:

Good news – Morrisons the supermarket reacted well to the trading issues brought about by Covid 19.  They committed to paying 3,000 small suppliers (turnover of <£1m with Morrisons) on immediate payment terms.  And continued to extend this while the trading conditions continue.

Bad news – Sainsburys supermarket on the other hand while stating their ‘cash position was strong’, scrapped the immediate terms early during the pandemic, heaping further pressure on already beleaguered suppliers.

A broader look at how businesses pay suppliers in the UK finds;

  • UK average payment terms are 37 days
  • 30% invoices are paid late
  • Just 7% offer some form of supply-chain financing
  • 1% of large businesses charge their suppliers to remain on their supply list

Why you should care

Being an SME is difficult enough, but when you have to finance your customers or not supply them at all, then it becomes very, very difficult.

While every SME is waiting 37 days to be paid, and even then 30% are late, they have to pay their suppliers and just as importantly their staff.  Can you imagine your company promising to pay you every 37 days and then 30% of the time they don’t?

Take Action Now!

Nine in 10 of us want to live a more sustainable lifestyle, but less than two in 10 are actively changing our lifestyle.  We need something simple, but effective.

That’s where the free Impact Score® app. comes in.  It starts by showing you whether companies are behaving well or badly.  Which companies are doing the right thing across the measures you have told us are important to you (paying suppliers quickly and promptly being one)?

Moreover, in a couple of clicks, you can tell businesses if you are happy with their performance or not.  And if not, that the business needs to improve or risk losing your custom.

Your voice is important.  Download the app in your mobile app store, and Make Change Happen.

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