A small business owner in the North East has spoken of the problems late payments have created for her, following the launch of The Journal’s Pay Fair campaign.
Alex Purvis set up creative marketing company, Pink Label Marketing, three years ago and has enjoyed a steady stream of work since.
But lengthy delays on payments from other firms of all sizes have seen her forced to tighten up her terms and even turn down a number of jobs.
“From the point of view of my value system, I’d expect everyone to be like me,” she said. “I trust people when they work with me and you’re putting your trust in somebody else when you do work for them.
“When those people don’t pay on time, it’s disrespectful.”
Alex set up her business after being made redundant from a marketing role in a friend’s IT company. By this point, she had also gained experience in a number of sales roles and had worked for a large advertising firm.
The ethos behind Pink Label - which offers a wide range of services from copyrighting to start-up marketing - involves encouraging businesses to think differently and express themselves through their brands.
But it wasn’t long before Ms Purvis realised that, while her work was sought after, it wouldn’t necessarily generate stable cashflow.
“My first paying client - someone I’d known for a while and who had said we would work together when I went into business on my own - took six months to pay,” she recalled.
“I wouldn’t have expected someone with whom I’d built up a relationship to do that and it made me very cautious going forward about working with people I knew.”
Since then, she has encountered everything from cash-strapped start-ups requesting work they can not yet pay for to large corporations that will query minor issues - such as the font used on an invoice - only after the payment term has expired.
Basic administrative issues have also had a significant impact, with firms delaying payment for the sole reason that someone in their accounts department has gone on holiday.
“Excuses can be anything from ‘I’ve lost the pin number and can’t use online banking’ to ‘I can’t get to the bank’,” Ms Purvis said. “Others might say they’ll pay by Friday, but when Friday comes around, they still won’t have paid. “Others will just have no money to pay with.”
To tackle the issue, Ms Purvis first introduced a 20% deposit into her terms.
When this didn’t have the required effect, she upped the deposit to 50% - a level that prevents non-payers, but still doesn’t eliminate late payment, she says.
Her payment terms, likewise, were reduced from 30 days to 14 initially, and now stand at seven - an appropriate condition, she believes, given many of the companies she works with want to use her designs pretty much immediately.
She added: “I think what’s needed is a change in the business culture. It comes down to personal character - if you don’t respect other people’s businesses or your own brand, no law will change that.
“It’s about promoting the mind-set that it’s best to be ethical in business and I think the North East Institute of Business Ethics is helping bring that to the forefront.”
She added that businesses could themselves benefit greatly from supporting The Journal’s campaign, since doing so made a clear statement of intent that could give them an advantage over their competitors.
“With the North East being such a small place, everyone knows everyone, so late payers will be found out easily,” she said. “You find that their names go round quickly at things like networking events. Hopefully, The Journal’s campaign will spur people on to create a better reputation for themselves.”
Bringing ethics to the heart of the business community
As well as asking North East firms to adopt a fair and responsible approach to paying small and medium-sized businesses in their supply chain, The Journal’s Pay Fair campaign is calling on companies of all sizes to support the North East Institute of Business Ethics (NIBE).
Set up in May 2013, the body acts as an independent regional resource that aims to place ethical behaviour at the heart of the North East’s business community.
Drawing on research from the London-based Institute of Business Ethics, it offers access to a community of people interested in the subject, thought-provoking events featuring practical advice, and the opportunity to contribute to a collective drive to transform working environments for the better.
The organisation is overseen by an influential steering group and has the backing of Newcastle University Business School.
In particular, The Journal is asking businesses to sign up to Institute’s Business Ethics Pledge, thereby agreeing to join with others to discuss the value of business ethics in society and to help turn working environments into places where ethics and community involvement are part of the everyday activity.
NIBE co-chair, the Reverend Canon Glyn Evans, said: “Each day we are faced with choices, some of which challenge us ethically. How do we make decisions about how we behave? How do we talk through moral and ethical dilemmas? Where could we find help or a listening ear?
“This is the opportunity that NIBE presents through its steering group, events programme and pledge that we are encouraging businesses and organisations to sign.
“Working together and leveraging our networks we want to provide an opportunity for businesses large and small, academics, professionals and representatives from the public and voluntary sectors to meet on neutral ground, query existing practice and put ethics at the centre of decision-making.”
The NIBE Steering Group
Co-Chairs: City Centre Chaplain, Reverend Canon Glyn Evans, and Caroline Theobald, managing director of Bridge Club Ltd and co-founder Newcastle University Business School’s Business Ethics Forum
Lucy Armstrong, Chief executive of The Alchemists
James Ramsbotham, Chief executive of the North East Chamber of Commerce
Robert Talbot-Jones, President of the Institute of Insurers
Bob Eldridge, of The People’s Kitchen
Hugh Welch, Senior Partner at Muckle LLP and Trustee at Shepherds Dean
David Faulkner, of Newcastle City Council
Kevan Carrick, of RICS and chair of trustees at the City Centre Chaplaincy
Paul Woolston, Chairman of North East LEP
Church Leaders including the Bishop of Newcastle
Professor Geoff Moore of Durham University
Barry Speker OBE of Sintons
Lucy Winskell, Pro Vice-Chancellor at Northumbria University
Chi Onwurah, MP for Newcastle Central