Straight-talking, common sense from the front line of management
Q You’ve recalled that 20 years ago you predicted the EU would “end in tears”. What do you make of the current talk of Britain eventually having a more informal free trade relationship with Europe?
A I did indeed suggest the EU would have an unhappy ending and see no reason to change my mind. The Common Market was established for the right reasons. In a world stifled by tariff barriers, a free trade area was a welcome boost for exporters and importers, and the spirit of co-operation has brought an unprecedented period of peace in Europe.
If it had simply remained a trading arrangement all would have been fine, but European politicians were bound to bring in EU rules including working time directives and compulsory use of the kilo. Once they agreed on a common currency there was no turning back: the euro had to lead to a unified finance policy which is a short step from the Federation of Europe.
We didn’t sign up to losing our identity. We want the freedom to be different and decide for ourselves if prisoners should be entitled to vote or whether there should be a quota of women in the boardroom. Every year we find a further slice of our life is being dictated from Brussels in a parliament we seldom see by politicians few of us know (can you name your MEP?).
There are 27 commissioners, one for each country, check out which ones are responsible for finance and economic affairs, industry and entrepreneurship the commissioners from Italy and Spain.
The prospect of becoming an associate member has considerable appeal but I doubt whether we can retain the trade benefits without keeping to most of the rules. Swiss traders have to comply with EU regulations if they want to do business in the EU, we will have to do the same, but at least Brussels won’t be setting our interest rates or telling us when we have to take bank holidays or change the clocks.
We wouldn’t want to miss out on the European market, but relegation to associative status may make us pay even more attention to business in the fastest growing markets around the world not a bad strategy.
We are more likely to remain as friends if we keep clear of full membership. A centrally governed United States of Europe will either quickly split into the haves and have nots, or the rich countries will have to pay penal taxes to bail out their poorer partners. I still think it will end in tears.
Q I supply a large retailer and their payment terms are horrific you’re lucky to get your cash in anything much less than five months and you still might be hit with a retrospective discount. How quickly do you pay suppliers and do you think our biggest companies should be paying their suppliers more promptly?
A Payment is part of the package between buyer and seller. We agree a wide range of terms from a week to two months but never get near the five months credit taken by some of your customers. Where companies have unilaterally demanded extended payment, I think this tactic is totally unacceptable a deal is a deal. Bigger companies do, however use their buying power and, as a result, they inevitably tend to take longer payment terms.
In 1970 when I was a shoe buyer, we thought it important to build long term loyalty with key suppliers. We paid within seven days but took a 6.25pc discount for such payment (then Bank Rate was way over 0.5pc!). We were nice, but not so nice that friendly suppliers could take us for granted. Buyers should drive a hard bargain but there is no excuse for being a bully.
In these days of e-auctions many people think buying is just about price and driving a hard bargain. It is a mistake to turn off good suppliers with a dictatorial demand that harms their business much more than it benefits yours. Don’t be surprised if an aggrieved supplier takes revenge by secretly increasing prices or putting you at the end of their delivery list. Good buyers build long term relationships with their key suppliers through teamwork not confrontation.
Suppliers sometimes underestimate their bargaining power. If you supply a great product at a good price there is no need to be pushed around. If you don’t like the terms on offer simply say, “No!” Only deal with customers that give you a chance to make some money.
John Timpson is the chairman of high-street cobbler and key-cutter Timpson.
Send him an email at: email@example.com