15 Feb Social media – the new weapon to combat late payment
Everyone knows that times are tough and times are toughest for small businesses. They’re faced with obstacles that can seem insurmountable – paperwork, regulation working capital costs. But there’s one obstacle above all others that can strike fear into the every small business – the late payer.
They are a scourge. Over years, an obsession with the optimisation of DPO (that’s accountant-speak for funding your business at the expense of your smaller, weaker suppliers) has become a central financial strategy for many large organisations. Some of the biggest household names in the UK were recently outed for extending their payment terms to an astonishing 180 days and there is an increased awareness among the public and politicians that this practice is grossly unfair.
How can small businesses who find themselves to be the victim of this practice deal with this issue? The remedy is to seek financial assistance but working capital is difficult to get hold of for many small businesses and despite interest rates being at historic low levels, if a small business can secure funding, they’ll pay through the nose for it.
The other remedy for the supplier is to sue. But the point at which a business decides to take such drastic action is the point at which they are financially desperate and all too often an expensive court case will be the final straw. Big business knows this and they will use it to their advantage.
But now there’s a new remedy. Increasingly, social media is being used to name and shame business bullies. According to their website, San Francisco Fitness haven’t payed one of their suppliers. Unlucky for them, the supplier that they (allegedly) failed to pay was their website designer who took appropriate action and reworded their website for them. See it here at fitnesssf.com.
[At the time of publishing, the Fitness SF home page described their alleged late payment performance but not any more. Looks like Fitness SF have payed their bills!]
But small businesses don’t need to have access to their poor payers’ website. Rather than writing increasing vexed emails – why not simply take the conversation public. A politely worded request to explain their reasons for late payment on twitter could reverberate across the late payer’s industry. And no-one wants their poor payment performance to go viral.
Some would say I’m being a bit hard on big business. They’d say that late payment is rarely intentional neither is it done for strategic reasons. To any doubters, take it from me, late payment is often absolutely deliberate and it is often done as part of a deliberate business strategy. Not always but often. There are many instance where is is not deliberate. It is sometimes mere incompetence. I can accept incompetence as a reason, but I would not accept it as an excuse.
Businesses that deliberately pay their suppliers late as well as those who fail to invest in purchase to pay best practice should absolutely be named and shamed. The culture of late payment should no longer be tolerated and governments should play a more high profile role in encouraging business to arm themselves with the types of tool and technologies they employ so effectively to get money in the door to deal with their suppliers efficiently and with respect.
Pete Loughlin can be found on twitter @peteloughlin