Collaboration or confrontation?

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Just a couple of weeks ago the Forum of Private Business accused some of the UK’s major corporations of using supply chain finance schemes as a cover for poor payment practice.

Now business secretary Vince Cable has come up with a plan for greater transparency of company payment practices to help suppliers to get paid on time.

The government is to force larger firms to publish information of their payment practices. It has also promised to also act to remove legal barriers preventing firms from accessing invoice finance.

However, the government has shied away from introducing a maximum legal payment period.

Generally the plan got the thumbs up from the FPB. Chief executive  Phil Orford said: “The government has helpfully steered clear of measures that seek to over simplify the variety of relationships that exist in the private sector, for instance by not introducing a maximum payment term.”

However, he accused the government of ducking “one crucial aspect of late payment; an ‘obligation’ under EU late payment legislation to put in place a mechanism that allows businesses to maintain their anonymity while challenging grossly unfair payment terms”.

Of course, trying to legislate for the way supply chain work is a hazardous business. Collaboration is central to supply chain efficiency. The question is: has Cable has done enough to improve payment times without turning supply chain collaboration in to confrontation?


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