Computer giant Dell entered into late payment Hall of Shame
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's Communications 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 Insurance service including a 24-hour legal advice helpline.
ENDS
About the Forum of Private Business
A not-for-profit organisation, the Forum of Private Business provides a personal, friendly and highly tailored service to its members - with the primary purpose of helping them run their businesses more profitably.
Representing thousands of small businesses across the UK - including retail, service providers and manufacturing companies - the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses. Visit www.fpb.org.
The Forum helps owners and managers of small and medium-sized businesses to comply with regulations via its dedicated member helpline, 24-hour legal advice line, and Health and Safety Guide, Employment Guide and Credit Control Guide.
In addition, the Forum's www.smallbusinesschannel.co.uk was launched in June 2009, providing a wealth of free video advice and information on a range of topics to business owners and managers.
The Forum is a proud supporter of the Children's Cancer and Leukaemia Group (CCLG): www.fpb.org/charity
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's Communications 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 Insurance service including a 24-hour legal advice helpline.
ENDS
About the Forum of Private Business
A not-for-profit organisation, the Forum of Private Business provides a personal, friendly and highly tailored service to its members - with the primary purpose of helping them run their businesses more profitably.
Representing thousands of small businesses across the UK - including retail, service providers and manufacturing companies - the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses. Visit www.fpb.org.
The Forum helps owners and managers of small and medium-sized businesses to comply with regulations via its dedicated member helpline, 24-hour legal advice line, and Health and Safety Guide, Employment Guide and Credit Control Guide.
In addition, the Forum's www.smallbusinesschannel.co.uk was launched in June 2009, providing a wealth of free video advice and information on a range of topics to business owners and managers.
The Forum is a proud supporter of the Children's Cancer and Leukaemia Group (CCLG): www.fpb.org/charity
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