Don’t forget small firms in Carillion aftermath
THE collapse of Carillion last month continues to make headlines.
The construction giant’s senior staff are currently being hauled in front of MPs to explain exactly how such a large employer was mismanaged beyond the point of no return.
Certainly, so many jobs being put at risk in the Midlands and beyond is a story worth reporting. But what many publications aren’t focusing on is just how hard SMEs have been hit by Carillion’s implosion.
When a big company is struggling to pay its suppliers, it is often the smaller players – who might not have the legal and accountancy teams to make their case – that get stung with late payments. Or, in cases like Carillion, sometimes not paid at all.
The ripple effect from SMEs being let down by their larger customers has consequences right the way down the supply chain. Given that it seems Carillion is not the only multinational firm experiencing these difficulties, it’s clear something has to change.
It is common practice in other countries around the world for businesses of all sizes to take on bad debt protection or credit insurance. China’s SINOSURE is a great example of a state-backed body that promotes foreign trade by providing subsidised credit insurance to smaller businesses looking to export.
When it comes to credit and debt, studies have shown that Britain’s businesses are too often not insured or underinsured. For businesses in these circumstances, credit insurance could help guard against potential future struggles with customers in distress – and it can provide valuable intelligence on new and existing customers, too.
Prudence is a good thing when it comes to managing supplier relationships, but can we do more than just remaining vigilant? In this regular column I intend to give the UK’s smaller businesses the airtime they deserve. Watch this space. Greg Carter is CEO of
Growth Street