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Entrepreneurs Panel

Charlie Mullins
Jennie Johnson
Richard O'Sullivan
Brian Hay
Debbie Pierce
David Pollock
Michael Oliver
Tony Caldeira
Laura Tenison
Steve Purdham
Jeremy Roberts
Julie Meyer

Is it in my interest to dump supplier?

Jeremy Roberts

Joined forces with Tim Bacon in 1996 to set up Life Restaurants, which launched the Via Vita restaurant chain. They opened the Living Room on Deansgate in 1999 -the first of a 13-unit chain that their company, Living Ventures, sold in July 2007 for £28 million – and did a deal with The Restaurant Group in 2005 which saw the pair take control of the Est Est Est estate, since rebranded as Blackhouse Grill and Gusto.

Question: 

One of my regular suppliers has got the hump over a late payment and has just sent me a demand for payment with interest. I know this is legally enforceable but is it unreasonable of me to bin them off after I’ve paid? They’re not the only supplier out there, after all, and they aren’t the only ones with cashflow issues.

Answer: 

Charging interest on late payments is always an emotive issue and, frankly,I find it insulting from a regular supplier if you have generally been on time with your payments in the past.

However, if you put yourself in your supplier’s shoes, you can understand why they might want to use the threat of interest as an incentive to pay on time, even if it is generally waived – which is what should happen if the relationship is strong.

Unless you are generally in cashflow difficulties – in which case it is sensible to discuss the matter with your supplier and offer to pay – you should ignore it and your supplier probably will too.

It is good for everyone if a business pays its bills on time and, especially in these days of low interest rates, good relationships with suppliers are worth a great deal more than any interest you might earn leaving the money in your bank account for a few extra days.

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