Press Release

FSB accuses big firms of abusing small businesses’ trust

21 July 2008

Large companies are exploiting small businesses by delaying invoice payments and imposing new terms and settlement fees on owners, the Federation of Small Businesses (FSB) can reveal.

The FSB has unearthed evidence that big organisations are unashamedly making smaller firms wait over 100 days before getting paid, often changing terms and conditions with little notice.

In one example, the high street chain Alliance Boots wrote to its suppliers in June to inform them that, as of April 2008, bills would be paid up to 75 days from the end of the month of invoice with a 2.5% settlement fee.

There is existing legislation which allows small business owners to charge interest on late payments, but many are reluctant to use this for fear of losing contracts with big businesses on which they are often reliant.

John Wright, FSB National Chairman, said:

“Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result.

“Making small businesses wait 105 days for payment and charging them for the privilege of doing so is nothing short of outrageous.

“At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit.”