‘Subbie bashing’ is where larger firms financially bully smaller subcontractors they’re working with. Often, the larger firms know they can get away with it because the smaller subcontractors do not have the resources to fight back. Additionally, many subcontractors do not feel they can stand up to these big clients, as it could jeopardise any future business from that company. These subcontractors then find themselves stuck in a cycle that they can’t get out of.
Subbie bashing can take many forms, including:
For those subjected to subbie bashing, it can quickly lead to cash flow problems and financial trouble.
According to the Federation of Small Businesses, SME late payments result in the closure of more than 50,000 small businesses each year. On average, small businesses are owed £80,000 each and last year alone £6.7bn was spent simply trying to collect money already owed.
The Government is attempting to help small businesses with regards to late payments. The plan is to fine large businesses who fail to pay small and medium-sized business suppliers. Additionally, some of the biggest Government contractors face being barred from public sector contracts if they fail to start paying small businesses on time.
If you’re owed more than £750 you can present a winding up petition to try to reclaim your money. Going down this route means you have the law behind you to get back the money you are owed. However, you should be aware that:
However, a lot of small companies don’t have the resources to go down this route. For some of them, the result of the subbie bashing is cashflow problems which are so severe that they are not able to pay their own creditors (i.e. the people they owe money to).
If your company is having cash flow problems, contact us on 0161 907 4044.
You will get free and confidential advice on what your best options are now.
Clarke Bell are Licensed Insolvency Practitioners with a wealth of experience helping small and medium-sized businesses and sole-traders.