ICSM's Ian Carrotte on blacklists, bad debts, late payers and how to survive in business in a recession

ICSM's Ian Carrotte on blacklists, bad debts, late payers and how to survive in business in a recession

One of the concerns of the so-called bonfire of EU legislation is the potential scrapping of legal safeguards around late payment. Late payment is essentially asking a business to give free credit stretching the supplier’s cashflow and forcing them often to take on an overdraft or loan to see them through a difficult period. In Germany for instance the Government went further with the right of creditors to apply a higher rate of interest to overdue invoices from a basic 30 days from the date of invoice. This is what we need in this country.

The Federation of Small Businesses (FSB) are right to press the Government, as Martin McTague says on doubling down on big firms who treat their suppliers badly. Sadly, many of those in government have little or no experience of day-to-day business. Thankfully the new business secretary Grant Shapps has a background in business so hopefully he will listen to calls for help from the FSB and the Independent Print Industries Association (IPIA) and The British Printing Industries Federation (BPIF) whose recent survey has created data on the vulnerability of the print industry to the business secretary.

The idea of a blacklist for bad payers by the FSB is in principle a good one as government contracts as we know can be millions of pounds – so it would make some of the usual suspects behave when it comes to their smaller suppliers. How it would operate is down to details but it would need to be published widely with the lawyers checking it first to prevent appeals and litigation.

ICSM has its ear to the ground with many of its thousands of members in the print and allied trades warning of credit problems. We have weekly accounts from members – especially in the supply chain such as paper merchants, couriers and print finishers – who have problems with late payment – or even non-payment. The list of those either in trouble continues to grow from Arjowiggins mills to financial publisher Bonhill and from Printwize to Gardners in Wales.

For years I have said one of the issues in the print industry is the tradition of ‘my word is my bond’ and still too many printers will take a handshake instead of a written contract to confirm a contract. It leaves many firms vulnerable to sharp practice as every time the likes of Debenhams or Top Shop go down they leave a trail of unpaid invoices. No one will ever go public if they have a bad debt as it can be the kiss of death for trade, so it remains a hidden problem until an administrator publishes a list of creditors and what they are owed.

The print industry has been highlighted by the Office of National Statistics (ONS) as being a particularly vulnerable industry in part due to soaring energy costs. Coupled with hikes in interest rates the rate of the pound against the dollar, double-digit inflation, business rates and the cost of fuel and you have all the hallmarks of a recession to which the print industry is particularly vulnerable. Hence the calls on the Government to cut the business some slack.

My advice as always is to put customers on stop if they fail to pay on 30 days – or whatever your credit terms are – and on larger contracts to negotiate a part up front payment schedule so you are not exposed to a larger debt if the worst happens. Put everything in writing – keep an email trail – and maintain strict financial discipline as it will get a healthy business through tough times.

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