Thursday January 19th 2017
Scotland’s late payment culture kills thousands of businesses and causes hundreds of millions pounds of economic damage, according to Federation of Small Businesses.
The FSB found that late payment costs the UK economy £2.5 billion annually, and 50,000 businesses go under as a consequence. Analysis shows that if Scotland adopted the payment practices of Norway, 2075 fewer firms would close annually, resulting in an estimated £134m economic boost.
In countries like Denmark, Germany, France and Hungary, big businesses pay their smaller suppliers far more quickly than they do in the UK, the report shows. The small business campaign group is urging the UK Government to get to grips with this growing problem.
Andy Willox, FSB’s Scottish policy convenor, said: “It is unacceptable that 2000 Scottish firms go to the wall every year because big business uses them as a free source of credit. Supply chain bullying must be stamped out, and we need to see Scottish business leaders signal that they’re against this perfidious practice.”
28 per cent of payments in Scotland are late, FSB survey work found, and firms are waiting on average an additional 7 weeks to get money in the bank. On average, each outstanding payment is worth £5718 to Scottish firms.
FSB has urged the UK Government to look at tackling supply chain payment issues as part of its current drive to improve corporate governance and to have powers and capacity to tackle this problem.
Andy Willox, said: “Tackling this problem will require a change of attitude at the top of private sector. We’re looking for real pressure from Scottish political leaders.”
In contrast it would seem that the public sector is much better at paying on time. A spokesperson for Midlothian Council said:
“Our performance reporting for Quarter 2 (August to November 2016), shows that 94% of invoices were paid within 30 days of receipt. Our overall target is 90%.”
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