The mainstream narrative for businesses that are subject to late payment is that they prefer to keep quiet about it for fear of losing future business. This post on LinkedIn seems to give the lie to that.
One person spoke out on LinkedIn asking for feedback about whether or not he did the right thing in applying pressure to obtain payment even though it lost him the client.
He didn’t name the customer but he did explain the circumstances. At the time of writing this blog post there have been 144 comments in response to the original post on LI. The vast majority of the comments apparently supporting his position that it is better to lose the business than to continue to do business with a customer that pays late to the tune of 100 days.
The point here is not about speaking out but about the narrative that suppliers prefer to retain business at almost any cost. What many of these people said in their comments is that this is simply not the case. Some direct quotes as follows:
“You definitely did the right thing – the hassle isn’t worth the business you’d be getting.”
“There’s no point working for someone and not getting paid, commercially you’re better off without clients that are prepared to breach your terms and conditions come what may.”
“You did the right thing. Businesses like that are killing off smaller businesses everywhere. Dodged a bullet in my opinion.”
Based on this anecdotal evidence (and the many other similar comments) it appears very much that SME suppliers do not view all business as good business. This being what it is there’s no reason why suppliers should not take a firmer stance on the matter of late payment.
Indeed one commenter even called for a national register on which suppliers can rate their customers in a similar way to the reviews that are made on Glassdoor. (We’re happy to oblige!)
“It is companies like this that are killing small companies in the UK. There has been talk of legislation but nothing ever happens and the cost in time and cash pursuing bad debts makes it prohibitive so the worst offenders get away with it time and again. ….. There should be a national register of poor/bad payers, like a Glassdoor for business.”
Some of the more measured voices suggested that an assessment needed to be made in context of the potential future worth of the customer, a swerve back to traditional narrative. But as the the original poster pointed out, had he known his client was going to adopt 100 days payment terms (using the time honoured excuse that he hadn’t been paid by a client further up the food chain) then the contract would not have been accepted in the first instance.
The episode brings four points into sharp relief:
- It’s not always worth accepting late payment on the promise of future business.
- It’s not necessarily bad to lose a customer if they pay late although it is worth finding out why they are paying late and if they need help.
- Early warning and due diligence can help offset the risk of doing business with a customer who could end up paying late.
- Anonymously sharing information about customer payment practices, be they positive or otherwise, makes sense.