LENDING TO SMEs GET BIG FIRMS TO PAY ON TIME SAYS RHA







Published by Gerald Ferreira Date: November 28, 2011
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The government should require leading companies to pay their suppliers promptly in order to get more money to small and medium-sized businesses (SMEs), says the Road Haulage Association.

“Government concern about banks’ lending to SMEs is welcome,” says RHA Director of Policy Jack Semple. “But many very large companies are in effect using their suppliers as banks. They use their power in the market to take up to 90 days to pay their bills, and in some cases even longer.

“Exploiting suppliers in this way undermines the corporate social responsibility of large companies and should be completely unacceptable,” Semple said.

“The impact is to stifle investment and growth in the economy. For example, in the road haulage tor, typically 60% or more of total costs – wages and fuel – must be paid within two weeks or less.  And yet firms are waiting for months to get payment from major buyers of transport.

“This is especially damaging to an industry such as road haulage and logistics, that is highly competitive and operates on low profit margins.

“Cutting the time large firms pay to 30 days from invoice would give a massive cash boost the SME sector.  And it is certainly needed – RHA members see cash flow and finance problems as a key obstacle to growth in the logistics sector,”  Semple said.