This post is a reminder that smaller businesses have to be keenly focused on their own cash-flow, rather than allow the terms under which they trade to be too flexible. In fact, there is a strong argument for NO flexibility in terms, even though this goes against the grain for many business owners, brought up on the UK culture of “you trust me, I trust you”. Terms of business simply need to be clearly stated from the outset and adhered to as a matter of course for every business transaction.
Larger organisations, with stronger cash reserves, will focus on getting the business done to their satisfaction, rather than paying for it. The important point is that they don’t necessarily intend to cause cash problems for smaller suppliers, but simply hang onto invoices until outstanding issues with orders are dealt with.
The issue of trade debt is endemic in the UK, that is certain. Smaller businesses need to be stronger in tackling it.