Small businesses speak out, cont’d

SMALL BUSINESSES SPEAK OUT, CONT’D…. 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 started publishing some of their responses Tuesday, and we wrap up the week-long series today with this note to Leonard.

Thank you for writing about this unfair practice by big biz and it is gratifying to see this arcane issue get the attention of popular media from your appearance on the Colbert Report. I am writing to also bring to your attention another pernicious practice by online merchants, notably the gorilla among them, Amazon.com.

This is the abuse of a loophole created by a pre-internet era archaic Supreme Court ruling regarding “Nexus” which exempts out-of-state merchants from collecting sales tax. This presents a serious competitive handicap to small brick & mortar retail whose “Nexus” albatross makes their total prices with tax seriously uncompetitive with their remote online competitors.

Incidentally, Amazon.com has also been a boastful practitioner of stretching its payable days and highlighting its escalating cash-flow as a result, as proof of its operational vitality. Their Account Payable days, mostly to its hapless small biz vendors, have increased from 62 days in ’08 to a current 72 days.

I hope in your writings in the future, you make a case for helping small business by plugging the sales tax loophole and promote a business ecosystem of free, fair and level playing field to flourish, bring back jobs and vibrancy to main street retail and much needed revenues to the state.