Small businesses bullied into new credit terms
Sep 13 2010
New credit terms are often forced upon SMEs
Small businesses are being forced by larger clients to accept new credit terms for fear of losing custom, research suggests.
In a survey of more than 200 businesses by invoice finance broker Touch Financial, half report that their customers have changed their credit terms over the last 12 months.
Of those affected by such changes, the majority (89 per cent) had no choice but to accept the new terms, even though they were mostly imposed mid-contract.
Simon Carter, director of Touch Financial, says: ‘Suppliers are within their rights to refuse, but the majority are clearly in fear of losing their customer, even if it means putting their business at risk.’
For some 40 per cent of the businesses surveyed, the imposing of new terms has stifled investment and future growth plans.
Adds Carter: ‘It has to be wrong for larger companies to force a change in terms and conditions without negotiation, especially if those changes are imposed after a contract has already been signed.’
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