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Big businesses stretch out payment terms

Asurvey conducted by one of the country’s leading credit reference agencies has indicated that small firms need to be more stringent on payment terms they receive from large customers.

Graydon UK claims that its research shows that large companies are increasingly making up the rules as they go along when it comes to paying their suppliers. It says that, when the going gets tough for them, large companies seem to feel that it is perfectly acceptable to ask suppliers to share their pain.

The company also claims that there have been several examples of this happening in the retail sector in particular over the past year. Matalan, M&S;, New Look, Debenhams, Arcadia, Alexon and Mosaic have all, apparently, informed suppliers that the rules of engagement had changed.

Amongs the 503 companies Graydon interviewed, 57 per cent said that they had experienced trade customers unilaterally changing credit or payment terms within the last 12 months. Only 16 per cent said that payments from customers have got better, while 36 per cent experienced a worsening of the situation.

The rule changes imposed by large firms vary, from demanding a discount on invoices received and justifying this on the grounds of increased competition, to simply extending payment terms. In some cases, firms plan to double official payment days from 30 to 60 days.