Member Article

‘Alarming’ levels of supply chain bullying, says FSB in wake of Premier Foods scandal

New research by the Federation of Small Businesses (FSB) has found “alarming” levels of widespread unfair dealing.

This comes after the Premier Foods ‘pay to stay’ scandal last week, where supply firms to the food giant were obliged to pay up to the company to ensure their place on the chain.

The FSB has reportedly found new evidence of supply chain bullying. In a new survey of 2,500 members almost one in five (17%) said they faced supply chain bullying in one form or another in the past 2 years.

The results indicate a deterioration of payment practices much wider than ‘pay to stay’.

The FSB is calling for a toughening up of the Prompt Payment Code, as well as fresh measures to stamp out the most heinous examples of bad practice like retrospective discounting and ‘pay to stay’.

The FSB wants to see any company looking to supply the public sector to extend the governments standard 30 day prompt payment terms to their own suppliers.

Small businesses want 60 day payment terms to be set as an absolute maximum for any business signed up to the Prompt Payment Code.

As part of the FSB research, businesses were asked to give examples of the most common poor payment practices they had to deal with including pay to stay:

• Flat fees – ‘pay to stay’
• Excessively long payment terms – ‘pay you later’
• Exceeding payment agreements – ‘late payment’
• Discounts for prompt payment – ‘one for you, one for us’
• Retrospective discounting – ‘balance sheet bonuses’

Gordon Millward, regional chairman, Federation of Small Businesses, said: “When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices which are becoming all too common across an increasing number of industries.

“However, it is clear that whenever these examples come to light, the public shares the same sense of moral outrage as the small firms that have to put up with them on a daily basis.

“The Government has indicated that they are prepared to do more to improve the culture of payment practices in the UK and they are right to do so.

“The sense I get from talking to our members is that small businesses are fast approaching the breaking point. They are no longer prepared to put up with these sharp practices.

“Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.”

If you or your business have been affected by supply chain bullying, let us know via email (editor@bdaily.co.uk) and tell us your story.

This was posted in Bdaily's Members' News section by Clare Burnett .