Small businesses are often surviving month to month, especially in their early years. They can’t afford to have a payment delayed, or go through a lengthy litigation process to collect on a contract. They are also often in a position where they are trying to build relationships with bigger clients.
Big corporations on the other hand often play fast and loose with timing of payments because they know that the small business generally cannot resort to legal recourse. Big companies also have in-house legal counsel or lawyers on retainer in case there is a dispute.
We should not be allowing big corporations to force small businesses to act as unofficial credit lines because of a difference in bargaining power. In some cases, it is literally the difference between staying in business and going out of business for the small shop.
We need to ensure that all businesses are playing fair so that our small business community can thrive.
I have run a small business that has been stuck waiting forever for a giant client to get around to paying. They know you can’t really do anything about it. We should do what we can to ensure that big businesses don’t use small businesses as an unofficial credit line. It would be better for the growth of small businesses over time.
Problems to be Solved
- Big companies can afford to stall payment to small businesses, sometimes spurring cashflow issues or forcing delays that the small companies can’t afford, or renegotiation of contracts in order to recover some payment.
- Small business growth
- Prevent big companies from using stalling tactics to delay payment to smaller contractors
As President, I will…
Work with Congress to pass a law requiring any company with more than 1,000 employees or $50 million in annual revenue, if fulfillment is not in dispute, to pay any invoice from a company with less than $5 million in revenue or fewer than 100 employees within 60 days of the date agreed upon or pay a rate of 7% annualized interest per month on the overdue payment, which will continue during any period of litigation if the small business is successful in proving its claim.