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Suppliers call for action as payment waiting times increase

Suppliers have called on the government to fast-track the launch of its new service aimed at settling late payment disputes after data emerged showing average waiting times have increased for small businesses.

Businesses with a turnover of under £1m now wait 72 days on average for invoices to be paid, according to research from the Asset Based Finance Association (ABFA), published on July 13. This is a day longer than last year and 11 days longer than at the peak of the recession in 2009.

ABFA chief executive Jeff Longhurst said: “Despite the economic recovery gathering pace, payment delays are getting worse for small businesses.”

Clothing suppliers said the findings showed a need to fast-track the Small Business Conciliation Service announced by new business secretary Sajid Javid as part of the Enterprise Bill, which will have its first reading in parliament this autumn. The service will aim to settle disputes between small and large businesses, particularly relating to late payment practices.

The Department for Business, Innovation & Skills will publish recommendations on how the service should run in the coming weeks. However, a spokeswoman said there was no timeframe in place for the launch.

“It would be good to have that resource there to go to for advice,” said Bhavik Master, director of Leicester-based knitwear designer and manufacturer Jack Masters.

“[Late payments are] always a problem, especially when you’re supplying fast fashion retailers or seasonal products that are affected by external factors such as mild winters. Lately, we have had to ask some customers to pay 20% to 50% upfront.

“Larger businesses can afford or have in-house legal and can spend more time chasing payments. For a smaller business, you’re probably not seen as that important.”

Hina Moss, founder of London-based supplier Kirei, said: “If the government is considering launching this [conciliation service], it should be done straight away, not some time in the future.”

James Barden, owner of Sevenoaks-based supplier Rextrek, said: “Every supplier wants payment leads to be less. Most of the people we supply are on 60-day terms so if they go to 72 days that’s not too bad. If you end up offering 90- to 100-day terms, which some people want, that’s when it’s wrong.”

However, Jenny Holloway, director of Fashion Enter, also in London, suggested smaller suppliers should strengthen their relationships with retailers rather than relying on a conciliation service.

Readers' comments (2)

  • East is a good reason why payment terms need resolution. The recession may be deemed over, however the clothing market is ever more highly competitive. Causing reduced margins amongst many retailers who already have high debt. Suggests more 'Easts' to come?

    Government needs to crack on.

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  • It will be a total waste of time and a useless ,and toothless ,body. They will spend months trying to sort out disputes and resolve nothing in the end.
    I would rather the government put this money they will waste into schools or hospitals please.
    And by the way this is from a supplier who also has to wait for overdue payments.

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