A classic indication of a business starting to get into trouble is when payments to a creditor start getting later and later. Credit control departments flag up such a pattern as an indication of a potential future bad debt.
Some suppliers start in rein in the debts at that time, others are more lax and often get stung when the business goes pop.
One of the most obvious uses of a B2B web portal in the bike trade would be for supply companies to pool their credit control departments into one. Debt chasing and information provision on bad payers would then be centralised. This concept is probably impossible in the fractious British bike trade but a website has launched in the UK which is a simple demonstration of the potential power of suppliers banding together.
Luckily for IBD late payers, www.solpre.com is not bike-trade specific and contains late-paying businesses from all sectors. Its the UK arm of a US debt chasing website that few in the bike trade will bother to consult.
But what if a group of suppliers got together and started their own naming and shaming site? It wouldnt need to be aligned to any one supplier so there would be little risk of a single company being tarred as a whistle blower. It could be dirt cheap to produce and would be widely referred to. Habitual late payers would start to be harried by all of their suppliers.
The question is, what would you consider a late payment? 60 days? 120?
(The voting session now online will attempt to find out the bike industry average for payments).
Of course, many business people see late payment not as a problem or an indication of negative liquidity but as a tactic to keep the cash earning interest in their accounts and not those of their creditors. Bike trade margins dont always allow for fantastic early settlement discounts.
However, late payment is something that cripples smaller suppliers who are the ones to introduce and incubate IBD-only sexy brands. Research company Market Assessment International found that 70 percent of a small businesss overdraft is to cover late payments.
Perhaps the bike magazines would like to gang together and name and shame the suppliers who take yonks to cough up!