Small firms under pressure

NATIONAL: Small to medium fashion suppliers are struggling to keep afloat in the current economic climate as big businesses extend payment deadlines, a leading financial provider has alleged.

Provident Cashflow, which has seen a spike in the number of fashion businesses seeking financial assistance since August 2007, said small businesses are under "crippling" pressure to meet daily cashflow commitments.

According to managing director Matthew Nolan, big businesses have slowed payments for small suppliers to over 60 days. This is more than twice the usual 30 days and represents the slowest pattern of payment since 2001, Nolan said.

"This can be expected to have an undesirable effect on business failures, with last year's peak of 747 [small business failures] in a single month expected to be eclipsed this year."

Nolan said it was even more vital for small business owners to manage their receivables in a period of economic uncertainty.

"Timely invoicing to your customers is essential," he said. "Sending invoices electronically will ensure they're not only received earlier than through snail mail but that a record is kept of the date and time sent."

Nolan said suppliers should be "proactive" but courteous in following up payments and use a reputable collections agent or a small claims court to chase any outstanding debt. Leaving a debt owing almost a year or writing it off entirely was not an option under current trading conditions, he said.