Bombardier In Trouble Over Late SMB Payments

Canadian multinational manufacturer Bombardier, criticized over its late payments to suppliers, must review its payment practices, according to reports.

An investigation by the small business commissioner began when the office received a complaint from Alistair Hugo Catering and Events. Alistair reported four outstanding payments, totaling £5,600 (just over $7,300 USD) and going back six months. The company had tried to resolve the issue, but was unable to do so even after numerous attempts to contact Bombardier.

Alistair didn’t complain about the service, and the invoices were not disputed. However, Bombardier and Alistair seemed to disagree on the terms of payment. Alistair thought it was to be settled 15 days from the end of the contract, and Bombardier thought it was 60 days. The small business commissioner’s office found that Bombardier’s possible misunderstanding didn’t matter, though, as the oldest invoice submitted was paid 223 days late.

The investigation also found that Bombardier lacked evidence to show purchase order numbers were provided for the invoices, and that no terms or conditions were provided when the order was placed.

Bombardier said the delay in payment was because it’d been unable to reconcile invoices with relevant purchase orders. The company added that its procurement government process required for purchase orders to be raised internally before any orders could be placed externally. Bombardier provided evidence of this, showing the process being followed for an unrelated order.

Alistair, however, showed two separate orders from Bombardier, one having a purchase order number and one not. The small business commissioner said it was evident that Bombardier had not followed its own process — as there was no visible audit trail for the relevant purchase order numbers regarding the outstanding invoices, nor evidence that they had ever been provided.

In addition, the small business commissioner found that Bombardier was typically late on payments. The company paid 61 percent of its suppliers outside of payment terms, with an average of 116 days for payments to come through.

In its defense, Bombardier said the instances raised by Alistair were unusual, and it acknowledged that things hadn’t worked as they should have in Alistair’s case.

Late payments are a pressing issue for small business commissioners. In the U.K., a bill was introduced to combat late payments, which account for 25 percent of a person or business’ insolvency. In Australia, controversy brewed over some companies’ use of a practice called reverse factoring, which could make things unfair in terms of which small businesses are paid and when.