The real cost of late payment

By Andrew Pring

- Last updated on GMT

Related tags: Money, Coffee

Pring: late payments are a problem
Pring: late payments are a problem
Taking ever longer to pay suppliers is a short-sighted policy and potentially disastrous for the industry, says Andrew Pring.

When times are really tough, 2009 tough, normal standards of behaviour can go out the window, can't they? In the interests of survival, anything goes, doesn't it? Surely everyone in business understands that, don't they?

Well no, actually. Not everyone does behave that way. Many people running businesses in this industry still believe ethics and decency count for something. That's how they are in their personal lives. And they'd feel shabby if they acted differently at work. But, tragically, they're being screwed over by a number of companies who are trying to ease their own problems by paying their suppliers later and later.

The scourge of late payment has plagued industries like construction for years, but until recently the pub trade has generally behaved honourably. In the last few months, that tradition has been abandoned by some of our biggest drinks companies. Sixty days payment to suppliers is now not uncommon. And there are rumours that a couple of companies are on 120 days.

This is sheer madness. A quarter of all business failures in normal times are down to late payment. In the current climate, such lengthy payment periods are bound to bring on a swathe of collapses among suppliers.

What could be more stupid than destroying your supplier base? Think what troubles it will create when new ones have to be found at short notice. Beer quality itself may be jeopardised if trade suppliers go to the wall.

The problem was bravely highlighted at last week's Brewing, Food and Beverage Industry Suppliers annual luncheon by Oliver Robinson. It is a subject that BFBI chief executive Ruth Evans has been campaigning on, as more and more horror stories have reached her ear from her members.

There is legislation intended to protect suppliers from late payment, but it can be very difficult for a small supplier to obtain redress. And, under duress and fear of losing work, the supplier may very well have begrudgingly signed to those terms.

The terrible recession means pain is being felt everywhere throughout this industry. But that's no excuse for treating those lower down the food chain with contempt.

We used to be good at looking after each other in this business. We still need to be.

PubChef

PubChef has been the MA's food magazine for years, and has won plaudits for its excellent coverage of the whole spectrum of pub food. PubChef's highly respected editor Jo Bruce is one of the best-known figures in this world. Now, as the vital importance of food to pubs continues to grow, we are bringing Jo's monthly title into our weekly pages. It makes the MA even more essential reading.

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