An investigation by the Federation of Small Businesses (FSB) has revealed what it calls “alarming” levels of unfair dealing, just a week after Premier Foods hit the headlines.
In a new survey of 2,500 FSB members, one in five said they had faced “supply chain bullying” in the past two years.
This survey comes after Premier Foods, owner of Mr Kipling, was criticised for its ‘pay and stay’ practices, in which suppliers were urged to invest in the business or risk being dropped.
The research revealed five types of common practices that small businesses had faced. These were:
1) Flat fees – ‘pay to stay’
2) Excessively long payment terms – ‘pay you later’
3) Exceeding payment agreements – ‘late payment’
4) Discounts for prompt payment – ‘one for you, one for us’
5) Retrospective discounting – ‘balance sheet bonuses’
The FSB is now calling for the Prompt Payment Code to be reviewed, as well as new measures to stamp out things like retrospective discounting and ‘pay to stay’.
John Allan, national chairman of the FSB, said: “When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices that 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.”