Large corporates killing small business

Large corporates killing small business

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Justin Cyder

12,624 posts

148 months

Sunday 20th July 2014
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PurpleMoonlight said:
Isn't there legislation in place that is supposed to stop this?
Yes there is. If you're involved in a repeat business long term relationship with a client, deploy it & see what happens. A sale isn't a sale until it's in the bank, but if you go round throwing legislation at your customers, you'll be out of business soon enough.

OTOH, if you're dealing with a load of one off customers on credit, go nuts.

HoHoHo

14,979 posts

249 months

Sunday 20th July 2014
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About 6 years ago we were owed £360,000 by HSBC with many invoices over 36 months old, we were turing over 1.3 million at the time so not an insignificant amount.

They were paying us on a monthly basis but there was always a shortfall that simply grew. The problem was we were making shed loads of money from that account and I was caught in the middle - do I stop supplying or not - I know I'll get my money and cash flow is OK but what to do....however....

Eventually after excuse after excuse I forced a meeting and told one of the heads of marketing that I was being investigated by the Inland Revenue for falsifying accounts and drawing dividends based on false profits, his department was about to have a call from the very same authority simply because if HSBC were doing to this to a small company were there some odd dealings at a higher level. I told him they were also concerned that his department may well be placing orders with us but paying a supplier for work they hadn't done, was there the possibility of fraud taking place? I lied and none of the above were true but I was running out of ideas!

I was told to my face that if I dare get any authorities/debt collectors involved we would be dropped as a supplier (this was also confirmed in writing which unfortunately I don't have any more)

However, as a result of the meeting and by chance the very next week I had £360,000 drop in our account and 3 months later we had our last order from HSBC as a direct result of my actions.

Was I worried?

Not in the slightest, there's no point having an order if it doesn't get paid and we have since refused to produce work for HSBC.

We are very careful with cash-flow and always have been, I won't work for anyone who doesn't adhere to our terms. There is always the odd exception but 90% of our invoices are paid on time.

ringram

14,700 posts

247 months

Sunday 20th July 2014
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We sent a customer a statutory demand after waiting 9 months for payment. That sharpened the senses as a winding up order was going to follow.
They paid and a few months later were placed into administration. There is an important lesson here!

Currently we are dealing with another bad payer, coming up to 80 days from invoice. We are undertaking a major piece of work with them and simply told them we were not supplying any more services until they had cleared their account. Lots of panic again and we are told we can expect payment by end of play tuesday.

We will see. They will have a statutory demand sent if its not there and we will have to deploy the guys elsewhere.

As above, people should have zero tolerance to customers who do not pay on term. Its close to theft IMO. You are better off not dealing with them.

I totally recommend a statutory demand, they are easy to issue and very effective. Dont bother with anything else if you need to get things moving.

https://www.gov.uk/statutory-demands


PurpleMoonlight

22,362 posts

156 months

Sunday 20th July 2014
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HoHoHo said:
Not in the slightest, there's no point having an order if it doesn't get paid and we have since refused to produce work for HSBC.
I agree totally. I have always thought a client who doesn't pay you isn't a client you want to retain.

I still retain the first client I ever obtained, 21 years ago. They provide my largest individual client fee income and have always been my best payer.

Soir

2,268 posts

238 months

Sunday 20th July 2014
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Bill around 8-10 (larger) SME's or blue chip companies per year. Get the odd delay but nothing a call or two doesn't fix

Sometimes I might put a call into accounts payable team a couple of weeks before invoice is due for payment to check 1) invoice is on the system 2) when payment will be made

Only rare experience of serious delays/lies and that tends to be small tin pot companies who I try not to work for

L555BAT

1,427 posts

209 months

Sunday 20th July 2014
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They know exactly what they are doing.

A local company went bust a few years ago due to cashflow problems mainly caused by a large wholesaler paying on a 90 day delay basis. 100 jobs list. High goods volume, low margin business so the company couldn't manage to keep up despite in turn delaying payments to a substantial number of smaller businesses. When the company went bankrupt, it was those smaller businesses who lost out mostly.

Suppose one lesson is to diversify your customer base so no single one has a stranglehold on you.

HoHoHo

14,979 posts

249 months

Sunday 20th July 2014
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L555BAT said:
Suppose one lesson is to diversify your customer base so no single one has a stranglehold on you.
That's the old 80/20 rule yes

Bikerjon

2,202 posts

160 months

Sunday 20th July 2014
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Sometimes I think 30 days is bad enough, but 90/120 days just sounds totally ridiculous! I mainly deal at the small business end and I can't imagine ever getting paid for a job 4 months after completion! I suppose the people that have to suffer those kind of terms are "adjusting" their prices accordingly.

Justin Cyder

12,624 posts

148 months

Sunday 20th July 2014
quotequote all
Bikerjon said:
Sometimes I think 30 days is bad enough, but 90/120 days just sounds totally ridiculous! I mainly deal at the small business end and I can't imagine ever getting paid for a job 4 months after completion! I suppose the people that have to suffer those kind of terms are "adjusting" their prices accordingly.
Imagine you have to routinely put up with 90,100,120 + payments. Then imagine that you operate in an over supplied, low barriers to entry highly competitive commodity based industry that prevents you from charging more because what you do is price sensitive & the only loyalty on display anywhere comes from your dog.

If you can imagine all that, then do come over & say hello. wavey

markcoznottz

7,155 posts

223 months

Sunday 20th July 2014
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Getting to the point now that some companies think they are doing you a favour to even think about paying, basically if you don't like it foxtrot oscar. Ties in with the modern relationship to both standards and ethics.

prand

5,910 posts

195 months

Sunday 20th July 2014
quotequote all
Bikerjon said:
Sometimes I think 30 days is bad enough, but 90/120 days just sounds totally ridiculous! I mainly deal at the small business end and I can't imagine ever getting paid for a job 4 months after completion! I suppose the people that have to suffer those kind of terms are "adjusting" their prices accordingly.
Last year I left my job of 9 years for a big UK tech company and a big reason for that was because of the new purchasing processes and t's & c's that we had foisted on us by the new overseas parent company. 180 days payment and the expectation of a blanket 10-20% reduction in contract prices and goods meant that we lost some absolutely brilliant small local suppliers, and we ended up having to go with the slow and expensive tier one guys as they could swallow the delays a bit more easily.

Two things that really got me; a 2% levy to suppliers for using the purchasing service, resulting in some screwy and pointless and costly factoring arrangements. the worst was when a PO approval (high 6 figures) was dragged out for 9 months plus with a supplier, services were still provided at expectation of price x, purchasing then put a metaphorical gun to their head and knocked 20% off. This felt a small step away from organised crime!

I felt a lot for their account manager as he was in the phone to me every day begging for some movement as all his revenue targets were going up in smoke.

Then SAP was thrown at us to manage purchase requests with workflow that didn't work or flow, so it wasn't long after my notice letter landed in my boss's inbox.

Big shame really, Purchasing were able to claim €xxxxxxxxxx in global savings, when the opportunity tcost of work and business benefit not being delivered due to delays in commercial cover, and the loss of some great value small suppliers and the admin and management overhead from all sides goes uncounted.

Being a small supplier, I would be extremely wary of dealing with big companies. Some may be straight and fine, but as people have said, it's not a coincidence that some do not like money to go out the door.

GTIR

Original Poster:

24,741 posts

265 months

Monday 21st July 2014
quotequote all
I am chasing five invoices from the same company. Two they say they never received, even though they were emailed over to the same email, the fourth has the wrong PO number and the fifth has been paid but is 95% short!

It's about 7% of my annual turnover.

I have kicked up a fuss now and got the CEO of the parent company involved, the Head or Procurment and Financial Accounting Manager, and I have put their account on hold, which is why the CEO got involved.

It's the only way. frown

Monkeylegend

26,226 posts

230 months

Monday 21st July 2014
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GTIR said:
I have been in business for nearly seven years. Apart from the general work, invoices, replying to emails, speaking to other drivers and customers, driving, a lot of the hassle is chasing invoices. Without doubt the worst offenders are large companies that have a faceless accounts payable department that employ people that get told to hold back invoices. irked

Over this time I have spent a lot of time speaking to accouts payable in various companies asking why they have not paid their bill. This gets repeated every few months with the same excuses, "Not received it", "Will be paid this week" (no, it won't), "No PO number/wrong PO number", "No invoice number", "same date as another invoice", "Our terms are 60 days" ("Our" terms!?).

I know cash flow is king. That's not the issue. The issue is the stress and hassle of chasing money that is owned to me for a service I provide.

SME's always pay on time and without hassle.

Large corporates never do. They don't give a toss.

I am on the verge of quitting it as it drives me nuts!

Rant over.
I do the same as you, have been operating for 13 years now, and have deliberately tried to avoid corporate work. It only accounts for about 30% of my business now, and I invariably have to wait up to 8 weeks for payment.

I have just terminated my work with one of the big insurance companies, because apparently I cannot be fully booked and say I am unable to do a job for them, and I cannot take a week off, the first in nine months, and get somebody else to cover two jobs for them. It was with great pleasure I told them they would have to find some other sucker to do their work.

Private clients, do a job for them and they pay you on the day, and they appreciate the service you provide.

I understand your frustration, and am seriously considering getting rid of all of my corporate work.

mph1977

12,467 posts

167 months

Monday 21st July 2014
quotequote all
whoami said:
MissChief said:
In a very large company there can be an attitude of 'someone else will do it' or 'I'm not sure I have the authority to pay that'. It is a problem in all departments of all large companies unless the department is very well managed. There's usually someone checking your figures and willing to grass you in to look good to their boss.
It's entirely orchestrated.
same basis as the DWP works

front desk staff aren;t allowed to do anything except signposting and taking names to check off on the appointment list etc

signing desk staff can only do signing

you cannot speak to 'decisions makers' even though they are upstairs / behind a door

you cannot speak directly to people who do things only by phone , even though they are i nthe same building

b0rk

2,289 posts

145 months

Monday 21st July 2014
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Mattt said:
It already is, The Late Payment of Commercial Debts (Interest) Act 1998 is there to help SMEs, additionally if you're in Construction then you have powers under the Construction Act.
Good luck with that if you go legal then fully expect the client to become an ex-client as soon as they possibly can.

smifffymoto

4,527 posts

204 months

Tuesday 22nd July 2014
quotequote all
b0rk said:
Mattt said:
It already is, The Late Payment of Commercial Debts (Interest) Act 1998 is there to help SMEs, additionally if you're in Construction then you have powers under the Construction Act.
Good luck with that if you go legal then fully expect the client to become an ex-client as soon as they possibly can.
Don't you think that if the legal route is your next course of action, then perhaps the client/customer isn't your best and you could regain a few nights sleep you have lost worrying about it!

plasticpig

12,932 posts

224 months

Tuesday 22nd July 2014
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Difficult with large companies. One has to assume the accounts payable bods have access to an aged creditors report (although sometimes the evidence would suggest otherwise). Large company we deal with pay out on statements not invoices. So if you never send them a statement you will never get paid.

ringram

14,700 posts

247 months

Tuesday 22nd July 2014
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Yeah we have had that line too.
Bottom line is keep in touch with their accounts dept and make sure you keep all emails for audit trail.

HoHoHo

14,979 posts

249 months

Tuesday 22nd July 2014
quotequote all
ringram said:
Yeah we have had that line too.
Bottom line is keep in touch with their accounts dept and make sure you keep all emails for audit trail.
We've found more larger companies are moving accounts payable overseas which can make life a little more difficult yes

markcoznottz

7,155 posts

223 months

Tuesday 22nd July 2014
quotequote all
HoHoHo said:
We've found more larger companies are moving accounts payable overseas which can make life a little more difficult yes
In which case it has to be said why bother even working for yourself? If you don't get paid in full you never really got paid at all. Small to medium size businesses cannot be experts in everything, including second guessing what google are up to (see other thread), and begging for thier OWN money to be drip fed back to them like pocket money. Surely a road to bankruptcy for some.....