Sage chief Brendan Flattery calls for action on late payments

Brendan Flattery says taking a responsible attitude to paying suppliers allows SMEs to thrive and 'do their part in growing the economy'

Brendan Flattery, chief executive of Sage UK and Ireland
Brendan Flattery, chief executive of Sage UK and Ireland

The chief executive of one of the North East’s largest companies has called on fellow FTSE members to tackle the blight of late payment to small businesses.

In an open letter published on the Sage Group’s website, UK chief executive Brendan Flattery said the Newcastle-heaquartered business software firm wholeheartedly supported proposals to address the “unacceptable situation” of late payment.

His calls came as the issue of late payment was raised on a national scale, with the Federation of Small Businesses (FSB) and the CBI both taking part in a meeting at Downing Street in a bid to tackle poor payment practices.

Mr Flattery said: “The health and vitality of the UK’s SME sector is crucial to the economic future of this country.

“Of the 5.2m private sector businesses in the UK, 99.9% are SMEs. They account for 60% of private sector employment, have a combined turnover of more than £1.6trn (47% of the private sector) and play a crucial role in the wellbeing of society and the development of communities in our cities, towns, villages and rural areas.

“Cash is the fuel of growth for these businesses and is crucial to their wellbeing.

“Without prompt payment, cash flow suffers, employees may not get paid and the livelihoods of many are put at risk.”

Sage, which works with millions of SME customers around the world and more than 800,000 businesses in the UK, is consistently told by its customers that late payments is one of their biggest business challenges, Mr Flattery added.

“Our recent annual late payment study has shown that British businesses continue to be blighted by late payments, with nearly two thirds of firms (60%) having to wait for 60 days or more for payment.

“This is clearly an unacceptable situation and we wholeheartedly support proposals that address this very real issue of late payment.

“We call for all FTSE companies to publicly commit to move towards 30-day payment terms for SME suppliers.

“By making this commitment, FTSE companies can give our small businesses the room to grow and thrive and do their part in growing the economy of this country. Ultimately that’s a win-win situation for all of us.”

The FSB has also stressed the impact of late payment on its members, with recent research suggesting almost one in five of them had suffered some form of ‘supply chain bullying’.

To help tackle the situation, the organisation, along with the CBI and leading FTSE 350 members yesterday met with business and enterprise minister Matthew Hancock at 10 Downing Street.

Speaking to The Journal afterwards, FSB North East regional chairman, Ted Salmon, said: “Following today’s encouraging meeting which brought together a wide range of views and stakeholders, the FSB is calling for a wide ranging inquiry to address late payment and supply chain bullying in one place.

“It must be independently led and produce clear recommendations in time for the next Government to act on early in the next Parliament.”

Mr Salmon congratulated Sage on “providing strong leadership amongst the FTSE 100 companies”, adding: “We hope that the rest of the FTSE 100 and other big business in the North East and beyond follow Sage’s lead.”

Through the Pay Fair campaign, The Journal is encouraging North East companies to take a responsible and ethical approach to paying firms within their supply chain.

We are asking firms to sign the Business Ethics Pledge created by the North East Institute of Business Ethics.

For more information, see http://www.nibe.org.uk/

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