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Supply chain bullying affects one in five small businesses

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John Allan: Small businesses are no longer prepared to put up with sharp practices.

John Allan: Small businesses are no longer prepared to put up with
sharp practices.

NEW RESEARCH by the Federation of Small Businesses (FSB) uncovers alarming levels of widespread unfair dealing. In a survey of 2,500 FSB members, almost one in five (17 percent) said they faced supply chain bullying in one form or another in the past two years. The results indicate a serious deterioration of payment practices much wider than ‘pay to stay’.

The FSB is calling for a toughening up of the Prompt Payment Code, as well as fresh measures to stamp out the most heinous examples of bad practice like retrospective discounting and ‘pay to stay’. The Prompt Payment Code should be a key tool in improving payment culture. The Government has promised to toughen up the code.

The FSB wants to see any company looking to supply the public sector to extend the Government’s standard 30 day prompt payment terms to their own suppliers. Small businesses want 60 day payment terms to be set as an absolute maximum for any business signed up to the Prompt Payment Code.

If a company will not agree to 60 days they should not be allowed to sign up. As part of the FSB research, businesses were asked to give examples of the most common poor payment practices they had to deal with including pay to stay. The FSB has used these examples to create a list of the five most resented payment practices in use across the UK today:

Flat fees – ‘pay to stay’ 

Also known as ‘supplier assessment charges’ or ‘supplier investment payments,’ these are flat charges which companies levy on suppliers either as a requirement to be on a supplier list, or packaged as an investment into hypothetical future business opportunities. It is often indicated that non-payment will result in de-listing. New research has indicated that more than a quarter of a million (260,000) businesses could be facing so called ‘pay to stay’ charges after five per cent of businesses surveyed said they had been asked to make a payment by a customer or face delisting.

Excessively long payment terms – ‘pay you later’ 

In 2011 the EU issued a directive requiring all businesses to pay their suppliers within 60 days, or face interest payments on money owed. However, the UK implementation of the directive allows businesses to agree longer terms “provided it is not unfair to the creditor.” This has led to many companies insisting on payment terms of 90 or even 120 days. In effect this becomes an interest free loan from firms in the supply chain to large companies with excessive payment terms.

Exceeding payment agreements – ‘late payment’ 

As well as insisting on long payment terms, many companies are routinely exceeding agreed terms, or changing terms retrospectively to allow them to miss agreed payment dates. Also thought to be common is the practice of extending payment dates if money is owed on, or close to, the end of a financial reporting date in order to smooth a big company’s balance sheet.

 Discounts for prompt payment – ‘one for you, one for us’ 

Prompt payment discounts are arbitrary discounts big firms give themselves for paying early or even just on time. For example, a firm that has agreed to pay 120 days following receipt of an invoice may also apply an automatic discount of 3% if they pay on or before the 120th day.

Retrospective discounting – ‘balance sheet bonuses’ 

Some firms seek to apply retrospective discounts to outstanding money owed to a supplier. This involves the company effectively changing the terms of the contract signed with the supplier after a contract has been agreed. Methods used to extract these vary, but include threats of de-listing, withholding payment, ‘marketing contributions’ and previously unagreed discounts applied to specific volumes of business. John Allan, National Chairman, Federation of Small Businesses, said: “When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices which 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. “The sense I get from talking to our members is that small businesses are fast approaching the breaking point. They are no longer prepared to put up with these sharp practices. Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.”

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Ferry Terminal ‘extremely busy’ due to ongoing Holyhead closure

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PEMBROKE DOCK Ferry Terminal has been experiencing significant congestion today as ferry services remain under immense pressure following the closure of Holyhead Port earlier this month.

The disruption, caused by storm damage, has rerouted ferry traffic through Pembrokeshire, leading to long queues and crowded facilities at the terminal.

The Herald can confirm that it has been very busy today with cars, lorries, and foot passengers queuing in large numbers. Staff are working tirelessly to manage the influx, directing vehicles and assisting passengers as they prepare to board the heavily booked ferries.

A spokesperson for the Port of Milford Haven said: “We are working closely with ferry operators and local authorities to ensure traffic flows as smoothly as possible, but the sheer volume of vehicles is causing unavoidable delays.”

Travelers are being urged to arrive early for their sailings and to remain patient as the terminal operates at full capacity.

Both Stena Line and Irish Ferries have increased capacity on their Pembrokeshire routes, deploying larger vessels, including the Stena Adventurer and the MV James Joyce, to handle the surge in demand.

From our position at the terminal, our photographer has captured photos showing long lines of vehicles, groups of foot passengers carrying luggage, and port staff coordinating efforts to ease congestion.

Authorities are advising non-essential travelers to consider rescheduling their journeys where possible and to monitor updates from ferry operators closely.

(Photos: Martin Cavaney/Herald)

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52 homes to be built in Roch as scheme gets final sign-off

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THE FINAL stage of approval for a near-£10m Pembrokeshire residential development of 52 homes has been given the go-ahead.

Back in April, members of Pembrokeshire County Council’s planning committee backed an application by Wakefield Pembrokeshire Ltd for the development, which includes four one-bed affordable housing units, on land near Pilgrims Way, Roch.

18 objections to the scheme were received, raising concerns including an “inadequate” affordable housing level, it being a high density development for a rural area, a loss of green space, the size of some of the homes, and pressures on existing services and facilities, and fears it may lead to an increase in second homes.

Nolton & Roch Community Land Trust (N&RCLT) has raised its concerns about a lack of affordable homes at the development, calling for a 20 per cent affordable homes element, as recommended by policy.

An officer report for members, recommending conditional approval, said: “It is apparent that the proposed development is not fully policy compliant, insofar as it cannot deliver the indicative 20 per cent affordable housing sought [by policy].

“However, a substantial positive social impact will arise through the provision of housing, including four one-bed affordable housing units, in meeting identified needs for both market and affordable housing.

“Financial obligations identified to mitigate adverse impacts arising from the proposed development cannot be met in full. However, [policy] acknowledges that in such circumstances contributions may be prioritised on the basis of the individual circumstances of each case.”

Speaking at the meeting, agent Gethin Beynon said the project had a “significant economic value” of around £10m, and the local applicant had “a sense of stewardship to the local community,” offering affordable housing and community infrastructure towards highways and education.

Approval was delegated to the council’s head of planning to approve the application, subject to the completion of a Section 106 planning obligation, making community financial contributions.

The Section 106 agreement was recently agreed, with the application now formally approved.

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World of engineering and welding SPARCs interest in Ysgol Harri Tudur’s female learners

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AN EVENT hosted by Ledwood Engineering gave girls from Year 8 and 9 at Ysgol Harri Tudur first-hand experience of the world of engineering recently. 

Engineering is a booming sector in Pembrokeshire with a high demand for skilled workers in exciting career pathways associated with the development of low carbon and renewable energy industry and the Celtic Freeport. 

The young women heard from industry experts on the importance of engineering in Pembrokeshire, and had hands on experience using a welding simulator, at the company’s Pembroke Dock site. 

The learners are part of the County’s SPARC (Sustainable Power and Renewable Construction) initiative aimed as inspiring and empowering young females to consider careers in science, technology, engineering and mathematics (STEM) pathways where females are under-represented in the workforce. 

SPARC is funded through an alliance comprising Blue Gem Wind, Ledwood Engineering, Port of Milford Haven, RWE Renewables, Pembrokeshire County Council, Pembrokeshire College and the Swansea Bay City Deal. 

Mrs Laura Buckingham, SPARC practitioner at Ysgol Harri Tudur said: “Our learners had a fantastic experience at Ledwood Engineering.  They were given lots of advice by industry experts on the different career options and pathways within the engineering sector.  

“They appreciated the opportunity to ask their questions and found the session very informative. Having the chance to trial their welding skills on the simulator was an experience they continue to talk about and has definitely piqued their interest.”

Poppy Sawyer, Year 8 SPARC learner added:  ‘It was a really good trip. Talking to the different people there has helped me know more about the jobs we could get which will be very useful when making choices for my future.”  

 “They helped us a lot by giving us lots of information. We were able to look around and try welding. It was really fun,” added Tianna Marshall, Year 8 SPARC learner.

The Regional Learning and Skills Partnership also launched its Explore Engineering interactive website at the event.

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