The Forum of Private Business is entering Dell into its late payment Hall of Shame after the company extended the time it takes to pay suppliers by 15 days.
Dell, which is one of the world’s leading information technology companies, wrote to tell what it called its ‘valued’ suppliers that it is ‘standardising’ its payment terms from 50 to 65 days from 10 July, citing ‘current economic conditions’ as the reason for the change.
The Forum has written to inform Dell it is being added to the Hall of Shame alongside other household names including Argos, United Biscuits and the brewer Carlsberg, all of which have been identified as poor payers.
The company has also been invited to sign up to the Government’s Prompt Payment Code, where signatories pledge to pay suppliers on time, give them clear guidance and encourage good practice throughout the supply chain.
Late payment causes serious cash flow problems for small firms, many of which are still struggling despite the UK’s economy entering a fragile recovery.
According to the Forum’s latest Economy Watch survey, almost one in five small firms (18%) said the problem of late payment and changes to payment terms and conditions has become worse. On average, 36% of respondents’ turnover is tied up in late payment at any one time.
Further research carried out by the Forum recently shows that 37% of late payers take between one and three months to pay invoices and, according to Bacs, more than £30 billion in outstanding payments is currently owed to small firms in the UK.
“Small businesses continue to suffer from the blight of late payment, which devastates cash flow and forces firms into administration. Companies like Dell have a responsibility to pay promptly – failure to do so can mean the whole supply chain seizes up,” said Forum spokesman Phil McCabe.
“When they receive a letter like this, smaller suppliers have no choice but to agree and stay silent. There is little room for bargaining. For the sake of small businesses and the economy the new Government must prioritise tackling the culture of poor payment, addressing the bully boy behaviour of these bigger companies.
“In the meantime we will continue to give small firms a voice by holding them to account publicly in our late payment Hall of Shame.”
Under the Late Payment of Commercial Debts Act 1998, small businesses have a Statutory Right to Interest, meaning they can in theory charge interest on late payments. However, few take advantage of this or are prepared to speak out publicly out of fears that large companies will simply take their business elsewhere.
Many larger companies take advantage of this culture of silence by imposing changes on their smaller suppliers’ terms and conditions, often mid-contract and with little warning, effectively sidestepping the redress provided by the late payment legislation.
One business owner who received Dell’s letter said: “As a ‘valued’ supplier of IT services to Dell I was dismayed to receive this notice via email regarding a change to their payment terms.
“Ironically, the reason for the change is apparently due to the current harsh economic climate.
“How is extending payment terms beyond the current draconian 50 days to 65 days going to help Dell’s legion of ‘valued’ SME suppliers, particularly when most of our suppliers demand 30 days net?”
Helping business owners beat late payment
The Late Payment Hall of Shame is part of the Forum’s ongoing lobbying to tackle the UK’s culture of poor payment. It is delivered by the organisation’sCommunications Director business support solution.
In addition, via its Finance Director business support solution, the Forum is helping members to get a grip on payment issues via its Credit Reporting, Debt Recovery and Business Monitoring member benefits.
The organisation also provides a Credit Control Guide, which is free to all intermediate, advanced and expert members, and a Legal Expenses Insuranceservice including a 24-hour legal advice helpline.
Phil McCabe
Media and PR Manager
Forum of Private Business
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