So much for corporate responsibility. Just one in four of Britain's largest companies has so far signed up to the Prompt Payments Code, a voluntary code of best practice on payments to suppliers.
This is a serious problem. Small and medium enterprises (SMEs) are owed £35bn in late payments, with all the negative effects on cashflow that has, and three-quarters of the FTSE 100 is effectively refusing to promise to try to do better.
It's not as if the Prompt Payments Code is especially arduous. It doesn't even require signatories to make payments within a set time. Companies can comply with the code simply by paying bills when they said they would, not seeking to change payment terms retrospectively, and by ensuring a clear system is in place to deal with any problems or complaints that do arise.
The Forum for Private Business, one of several groups that last week jointly launched a campaign to persuade many more FTSE 100 companies to sign the code, says Britain's biggest companies are currently sending out the wrong signals. "By subscribing to the code, they will be leading the way as they rightly should for others to follow," says Phil Orford, the FPB's chief executive. "This is their chance to lead by example on what's an extremely important issue for small businesses."
Don't hold your breath. The late payments problem is one that successive governments have struggled to solve, despite new legislation and a series of similar codes of conduct.
The biggest difficulty is that SMEs are often dependent on a small handful of large clients for their very survival and are reluctant to confront these clients, even if they're serial late payers. So while they may be entitled to take legal action against late payers – and to add interest charges and legal fees to their bill – they very rarely do, for fear of losing future business.
Instead, we continue to see growth in the factoring sector, where SMEs sell on their unpaid invoices – at a discount – in order to ease their cashflow problems. And while this niche of the financial services sector certainly meets a need, the fact that need exists is a pretty damning indictment of large businesses that don't pay their bills in a timely fashion.
Is there another option? Well, it would certainly be interesting to see organisations such as the FPB get more proactive – encouraging SMEs to band together to take action against persistent offenders on late payments, for example. While piecemeal, such actions might have a positive effect. There may be still more the Government can do too – a naming and shaming exercise, say, for the worst companies.
Still, the latest initiative on the Prompt Payments Code is also worth supporting – the only explanation for the reluctance of 75 large companies to sign up is that they simply can't be bothered, for there is nothing in the code that any of them would have any problem with in practice. We need to start changing that attitude.
The alternative is that we simply leave the late payments sore to fester. But that would mean more profitable companies going under because of cashflow problems – or at least seeing their potential growth curtailed. Bad for them, bad for the wider economy – and bad for larger companies too in the end.
Ubisense keeps on winning
Ubisense Group, the Cambridge-based technology company, is planning a double celebration today. Not only will it tonight receive a Queen's Award for enterprise, but it is also due to unveil details of a major new client win.
Ubisense makes top-end location monitoring devices – think GPS only much more accurate – to improve the efficiency of supply chain processes. It has an impressive roster of clients in the automotive sector, but will today add South Korea's Hyundai Kia to the list. It is installing Ubisense's system on its assembly lines in the country.
House broker Edison believes the evidence that the business is winning contracts is likely to help drive Ubisense shares, which closed on Friday at 210p, above 249p.
A firm that may improve our world
A warm welcome to Revolymer, which joins the Alternative Investment Market tomorrow, and stands a real chance of improving the world in which we live. It's a British company that has been making technological advances in the polymer sector, working closely with food businesses. It is working on a new type of chewing gum that will be far easier to clean off pavements. That might help local authorities slash the enormous cleaning bills they incur on chewing gum, as well as making our streets more pleasant.
Though still loss-making, the company raised £25m from investors during its IPO, giving it a market capitalisation of £53m.
Small Businessman of the week: Daniel Land, co-founder, Coco di Mama
My business partner Jeremy Sanders and I both had good jobs and we enjoyed what we did, but at the back of our minds, we always knew we wanted to do something else. We share a passion for food and we began talking about how there was a gap in the market for a quick-service restaurant serving Italian food at lunchtime. We started working properly on the business idea in January 2010 but it wasn't until five months later that we resigned from our jobs. That was the scariest day of my life.
"We've been very fortunate with our investors – while we wanted to self-finance as much as possible, we knew we would need additional capital and also that we wanted to be able to draw on other people's experience. The restaurateur Arjun Waney has backed us and so has the former Marks & Spencer boss Sir Stuart Rose, who is now our chairman. Having someone like him to take advice from is just phenomenal.
"We finally opened our first store on Fleet Street in April 2011. It's in a very competitive location, amid lots of other food outlets, but we wanted to test our theory that there was fatigue with the big brands. So far, business has been amazing – exceeding our projections – and we've just opened a second store on the other side of the City.Reuse content