Acting Responsibly – a blog by Philip King
6 February 2014
The BIS Discussion Paper ‘Building a Responsible Payment Culture’ closed last week and I’m chairing a Round Table of Prompt Payment Code signatories at BIS next week. That, together with the consultation responses, will make for some interesting discussions. I don’t want to pre-empt anything that might come out of the consultation but I have to take issue with some of the press comment from trade bodies and the like.
I know that there are numerous examples of big businesses exploiting their smaller suppliers; I know that there is some appalling practice where large customers abuse their power and ride roughshod over small businesses that feel powerless to do anything but comply with the demands being made; and I know we need to change the business culture and stamp out bad practice.
But please don’t let us lose sight of the fact that bad practice isn’t restricted only to big businesses, and let’s not kid ourselves that all small businesses are perfectly behaved. I saw a graph not that long ago showing that the worst payers were the very largest organisations, closely followed by the very smallest, and small businesses sometimes work to maximise their cash position just as the largest ones do.
Comments suggesting it should be mandatory for the largest businesses to spell out their payment terms, as well as agree to pay promptly are right, and I don’t disagree, but why just the largest businesses? If we’re going to change the culture, it has to be from top to bottom. Starting with the largest makes sense and we need them to set an example. But if we’re going to propose measures that increase transparency and encourage responsibility – and I agree we should – we must apply them to all.
Finally, I must just mention the ICM British Credit Awards next Wednesday evening. The event is completely sold out and I know we’re going to have a great night of celebration and networking with the credit community of which the ICM is at the heart. I look forward to seeing you there.