The news that supermarket giant, Tesco, had been deliberately delaying payments to suppliers coincided with a friend asking me to look at some removal quotes he’d received, to move his small business. One of the first things I noticed was that some of these removers wanted payment in advance. Two extremes; both of them wrong.
Now, there is a good argument for a local remover expecting to be paid in advance for a domestic move. But moving a business is a different discipline – and of course a very different market. I would be very concerned about the financial stability of any service provider expecting advance payment from any of my clients – except in exceptional circumstances*. Also, why should the client pay for something they haven’t yet had? Plus – and I hate to say it – what if the service does not match up to the promise? No decent business should pay for its removal before it’s happened. Equally, payment should not be unreasonably withheld once the service has been received.
Standard business to business practice is for invoices to be submitted on completion of the work and paid promptly, on or within 30 days. You know this. You may want to agree whether that’s 30 days from invoice date, or 30 days from invoice receipt – that’s up to you. For longer drawn out projects, progress invoices or staged payments should obviously be agreed. Professional removers should have no problem with this type of arrangement.
On the other side, let’s first say that Tesco’s is an exceptional case. Bigger organisations certainly used to have a reputation for bullying smaller ones and habitually delaying payment. But I have to say that, with some exceptions, my own experience has been quite the opposite.
Some businesses are quite blatant about their bad business practices. I have come across organisations who clearly state that payment will be made to suppliers 60 days from receipt of invoice – which, in practice, means that it can take up to 90 days for suppliers to get their money. Other organisations are more underhand, just plain inefficient – or perhaps the authorising manager simply does not care – and I have experienced a few of those too. If you’re happy with what you’ve received, why would you not pay for it within a reasonable time? There is a very strong argument for looking after your suppliers as well as you expect them to look after you. I have been in business long enough to be cynical, but still believe that fair payment terms help oil the wheels of good business.
*Perhaps if the job requires investment in equipment that the contractor does not normally have. Or if, it has to be said, if the client has a poor credit history.