Small businesses speak out

SMALL BUSINESSES SPEAK OUT…. Last week, Jeffrey Leonard, CEO of the Global Environmental Fund, talked to Stephen Colbert about his article in the latest issue of the Washington Monthly. The appearance generated some interesting responses.

If you missed the interview (and the article), Leonard is shining a light on a serious problem small businesses face, but which hasn’t generated much in the way of attention: “Many small firms are handicapped by a new twist on an old parasitic business practice that large corporations are using in the wake of the 2008-09 financial crisis, one that has significantly reduced the cash available to small businesses to invest and hire new employees.”

Leonard has several proposed changes, but the most straightforward is also the most effective: require companies with federal contracts pay their suppliers within 30 days of invoice. The shift would not only improve small business cash-flow, but would also help expand hiring.

After the interview, we heard from more than a few small businesses that could directly relate to what Leonard described. We’re going to publish some of their responses this week, starting today.

Here, for example, is a note we received from someone who ran a small airline in New England.

One of our biggest customers was New England Telephone. Their people traveled all over our system on a daily basis. They paid on a “direct bill” basis.

Our phone bill was considerable. $800-$900 or more a month. We built up a couple of months’ of payables, and they threatened to cut us off. We couldn’t pay our bills because they (and others) owed us money.

They owed us $27,000. We owed them something like $2,200. They shut us off.

Of course, this was devastating to our business, and, as the chief, I had to figure something out. I called the president of NET (from my business neighbor’s phone). Managed to get through to his secretary. She told me “Oh, you have to understand. We bill on 30 days, but pay on 90 days.”

Thank you again for bringing this matter to light.

We also heard from Becker Multimedia.

As a small business owner whose clients are larger corporations, I applaud Jeffrey Leonard for his article and appearance on Colbert Report. He tells the truth.

Larger corporations are throttling small businesses with procurement and supply chain management practices that are profoundly dishonest, manipulative, unfair and ultimately destructive. I have noticed too that some larger banks (e.g. American Express, Capital One) are marketing credit products specifically tailored to alleviate the pressure caused by these practices – at even more cost to small businesses.

And this note from Pennsylvania also rang true:

Saw Jeffrey Leonard on the Colbert Report last night, and love that he’s making a big deal of this. I’m a freelance medical writer, working primarily as a subcontractor to medical communications and advertising companies. All of my clients (most of which are small businesses of