I read another critical article in the FT at the weekend about Alliance Boots extending its payment terms to suppliers to 75 days from the end of month invoice date, thus squeezing the cash flow of countless numbers of smaller British businesses.

Alliance Boots and other large corporations publish an awful lot about their Corporate Social Responsibilty policies, and what they do to make the world a better place. Boots for instance talks on its CSR website about  its belief that it has an "enormously valuable role to play in promoting the health of our nation", and also believes in treating its customers "fairly".

So are suppliers not important stakeholders in the Boots business? Why no mention that they, like customers, should be treated fairly?  Does anyone think about the social and economic impact of not paying suppliers on terms that they can live with? Does big business worry about smaller companies going to the wall with cash flow difficulties, or the fact that business people who run small businesses will suffer stress and anxiety as a result of their actions?

If they do worry, there is no evidence of it unfortunately... which means that business credit squeeze anger amongst the SME community will continue to grow I'm afraid.

March 31, 2008 | Permalink | Comments (0) | TrackBacks (0)

Back on January 16th in my blog, I questioned whether BDO Stoy Hayward were right when they said the credit crunch was likely to cause an increase in fraud. How many usually decent and law abiding business people would be driven through desperation to become felons?

Yesterday, the turmoil in the stock market caused by malicious rumours in the city caused HBOS share values to fall by nearly 20% at one point. Were these rumours driven by fear or plain greed? Others are saying that the rumours may have been started by someone purposely setting out to make a fast buck to make up for significant losses in recent months suffered by hedge funds and others. Short selling is quite legal of course but market manipulation is a criminal offence because it is a type of fraud. It will be interesting to see if the FSA will ever find out who started the rumours and why. 

Another commentator said on the radio this morning " When the going gets tough, the fraudsters get going". Maybe BDO Stoy Hayward are right!

March 20, 2008 | Permalink | Comments (0) | TrackBacks (0)

Well, I suppose it shouldn't come as a surprise, but the latest Graydon research, involving around 450 companies, suggests that nearly 7 out of ten credit professionals expect more bad debt in 2008 due to the uncertain economic outlook. I bet most of the research participants in the retail supply sectors were amongst the gloomiest. On the same day as our research was finalised, the British Retail Consortium announced that retailers only saw year on year growth of 1.5% in Feb (with no adjustment for inflation!)

For clothing retailers ,February was the fifth month in a row where year on year comparisons in sales were negative. Discounting in January lifted spirits and sales a little, but now consumers have opened their credit card statements, some retailers are back into hope and a prayer time.

March 11, 2008 | Permalink | Comments (0) | TrackBacks (0)

Gordon Ramsay has his critics, but at least no one can accuse the  famous TV chef of "cooking the books" as far as his company's financial results are concerned- the fact is, no one has seen his accounts recently- much to the displeasure of Companies House. The Daily Mail reported recently that CRO fined Mr Ramsay 3, 500 GBP for late filing of his accounts. (under the present law, private limited companies have to file their results within 10 months of year end). Graydon's database records that the latest accounts on file at the CRO for Gordon Ramsay Holdings Ltd are for the fiscal year ended August 2005- not much use to anyone as they are so old.

Good cooking, as Gordon knows, is all about getting the timing right- this holds true in other walks of life too Gordon!

March 5, 2008 | Permalink | Comments (0) | TrackBacks (0)

As a result of the 2006 merger between Boots and Alliance Unichem, the Integration finance board of the new group announced a few weeks ago that it will be standardising  UK payment terms for invoices for any goods or services purchased after 1st April 2008. Good news for suppliers then? Nope- these new terms will be 75 days from the end of the month of invoice, and will further provide for the application of a settlement discount of 2.5% of the invoice value if settled promptly.For a supplier that has been paid in say 45 days in the past, turning over 10 million pounds in sales to Boots per annum, the additional average amount outstanding will be 1,234 million. Assuming the cost of credit from banks is 7%, then the cost of funding the additional credit will be 86, 000 GBP.

Boots says that its procurement strategies are in line with other groups of similar size and scale. True- Debenhams, Robert Dyas, Selfridges, BHS and B&Q amongst others have all arbitrarily enforced less attractive payment terms onto their trade suppliers in recent times in what now has become a bit of a stampede by giant retailers to flex their buyer muscle. Has anyone got any advice for trade suppliers in these circumstances?   

March 3, 2008 | Permalink | Comments (2) | TrackBacks (0)