Boots Shaft Small Business Owners and Pay Invoices even Later

Boots the chemist has introduced new credit terms on its invoices for small business owners meaning they now take longer to pay and charge a 2.5% settlement charge.

This may be old news for some but Boots has crossed the boundary in the long known battles small business owners have for collecting debt from larger businesses. In a letter to their small business suppliers Boots wrote:

“We inform you that all invoices related to ***** contracts received from
1st April 2008 will be subject to a 2.5% discount before VAT. Terms
will also change to 80 days from the end of the month of your invoice”

“Can you please confirm acceptance of these terms within 7 days. In the
event of no responce we will consider this as your acceptance”

So Boots deduct 2.5% from invoices and now pay up to 110 days from the date of your invoice. The Federation of Small Businesses wrote something up but don’t appear to have the teeth to make anyone back down on issues like this.

Many business owners are likely to accept the terms because they need the business and Boots know this although some have taken a stand and now refuse to supply them.

The Forum of Private Businesses (FPB) have written to the office of fair trading revealing their “hall of shame” with other companies that have tough practices for small business owners attempting to get paid and include companies such as Allders, Argos, Betterware, BHS, Debenhams, Homebase and John Lewis. Some changes have been made by the companies although the OFT are mainly concerned with businesses ripping off consumers rather than other businesses.

The changes made by Boots have been widely reported and the BBC has picked up on it this week. A Boots spokesperson said :

It was seeking to align its policies with those of Alliance Unichem following their merger in 2006.

Alliance Boots was subsequently bought by private equity firm Kohlberg Kravis Roberts for £11bn last year.

“We are committed to working with our suppliers for our mutual long-term benefit,” the company said in a statement.

“Our procurement strategies are in line with other groups of similar size and scale.”

Not good enough really. The media aren’t interested in the tough life small business entrepreneurs face in their daily lives nor are the government (as they recently increased the tax paid on profits by small business owners by 10%) - so we are left to fight alone.

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