A petition has been set up to lobby government to introduce a standard payment term of 28 days from receipt of invoice, in order to speed-up supply chain finances and relieve some of the pressure on small and medium-sized producers.
Graham McQuade said he has begun the campaign due to his exasperation at the payment practices of large receivers of goods. Supermarkets, he pointed out, often take up to 90 days to pay suppliers and have usually sold the goods on by that time. And their customers pay instantly, at the tills.
“It is plain to see that the beating heart of UK manufacturing is being squeezed ever tighter and is still being forced to support the largest companies across the land; the ones that continue to post huge profits,” he says.
While the “biggest offenders” are supermarkets, McQuade says, government itself is also “guilty” of leaving suppliers waiting a long time for cash they are owed.
McQuade now works in accounts management but has spent a large period of his working life employed in food and drink manufacturing firms, including a long spell at Unilever. He says he has family and friends in various positions at manufacturing firms, including ownership, and understanding their plight has spurred him into action.
“I have seen the impact of ‘unreasonable’ payment terms at first hand and the effects that it has had on the industry. Many companies have gone into receivership because they have not been able to ‘bridge the gap’ between paying for their materials and waiting for their money. This this is normally done with an overdraft or loan and obviously this comes with a charge.
“But the current economic climate has made the situation worse because the option of ‘bridging the gap’ is being taken away with banks not keen to take the risk.”
He wants the 28-day maximum period for payment from the date of receipt of an invoice to become not just industry-standard, as the Prompt Payment Code suggests, but legally binding. “Then, small to medium sized businesses wouldn’t need to rely on loans for expansion and growth,” says McQuade. “They could grow from the rewards of their own products, sales and services.”