A businessman who hit the headlines when he refused to work for construction giants that don’t pay promptly has welcomed a report aiming to end the scourge of late payments.
Steven Sutherland, chairman of Huddersfield-based architectural glazing firm Dortech, sacrificed millions of pounds in potential orders to protest at payment policies he says risk putting suppliers out of business.
Mr Sutherland, whose firm employs about 50 people, was among those giving evidence to an all-party late payments inquiry led by Debbie Abrahams, Labour MP for Oldham East and Saddleworth.
Now the inquiry has published its report detailing 11 recommendations to tackle the impact of late payment on small and medium-sized businesses.
Ms Abrahams said: “A recurring theme in the evidence our panel was given is that, ultimately, the issue is one of leadership.
“Until top chief executives and their executive board members make a decision to act ethically in business and treat our small and medium sized businesses fairly, this problem will persist.
“The public has grown tired of hearing about huge, greed-driven, pay packets, pay-offs for failure and tax evasion; but allowing a culture of late payment to persist unchallenged is another board-level decision that directly effects ordinary, hardworking, people across the country.”
Mr Sutherland said: “The last 12 months have been the worst in my 45 working years.
“I have watched in disbelief as a tough market has driven major companies’ boards of directors to turn a blind eye to malpractice within their businesses and the resultant destruction of essential supply chain support, skills and entrepreneurialism on which the UK depends.
“This excellent broad-based, balanced research and investigation now provides the basis and opportunity to bring about the critical first steps of change – if Government and the directors of companies have the courage to embrace and implement the recommendations.”
Steve Paul, managing director of SDP Screeds Ltd, who also contributed to the inquiry as a business owner hit by late payments, said: “I’m really hopeful that this report will give big business leaders the push they need to change the way the use of late payment to SMEs is considered the norm in ours and other industries.”
The recommendations include ones to promote “good practice” guidance for large companies in managing supply chains; publish performance data relating to payment-on-time to suppliers in audited annual accounts; and government help for SMEs to avoid late payments through free, high-quality financial management advice and training.
They also include calls for a Fair Treatment Charter and a strengthening of voluntary codes to reduce late payments.
Other recommendations include specific action to tackle late payment in the manufacturing and construction sectors – seen as the worst-affected – and in the public sector.
The report also called for a growth strategy to boost SMEs, noting: “The late payments issues facing SMEs are brought into sharp focus because of the state of the economy. Shrunken order books are exacerbating cash flow issues, which in turn are affected by difficulties accessing finance and getting paid on time”.