The TWO different definitions of Prompt Payment
Call me naive but I always thought there was only one meaning to the phrase “Prompt Payment”. However, in the world of commercial “spin”, this is apparently not true.
It has been well documented in the press in recent years that many large organisations like Carlsberg , Matalan, Boots and Dell have unilaterally amended their invoice payment terms to suppliers, anticipating that most of them will just roll over and accept the newly imposed terms in order to keep the business.
If a supplier accepts 75 day terms, and the customer pays on 75, the customer would call this prompt payment. On the other hand, most organisations outside that particular commercial arrangement would see it somewhat differently. Is a unilaterally imposed 75 days to pay a normal trade credit agreement Prompt or is it slow?
Many suppliers to these large organisations that have flexed their commercial muscle to impose extended payment terms also consider them as bad payers, but those same large corporates would be quite in their rights to actually sign up to the government’s “Prompt Payment Scheme” suggesting that they are fully supportive of attempts to get big companies to pay smaller ones in good time to help with their cash flows. Its quite ironic that the same organisation can appear on pro- SME websites that publicise “Hall of Shame” poor payers, while appearing in the Government supported “Prompt Payer” list.
It’s all about which angle you’re coming from I suppose!