According to the Forum, Dell wrote to tell what it called its “valued” suppliers that it is “standardizing” 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 Carlsberg, all of which have been identified as poor payers.
The OEM 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, said the Forum.
Its latest Economy Watch survey found almost one in five small firms, 18 percent, said the problem of late payment and changes to payment terms and conditions has become worse. On average, 36 percent of respondents’ turnover is tied up in late payment at any one time.
Further research carried out by the Forum recently shows that 37 percent of late payers take between one and three months to pay invoices. UK electronic payment scheme Bacs said that more than £30 billion in outstanding payments is currently owed to small firms in the UK.
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. The Forum says that this is often mid-contract and with little warning, effectively sidestepping the redress provided by the late payment legislation.
Forum spokesman Phil McCabe said: “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.
“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 prioritize tackling the culture of poor payment, addressing the bullyboy 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.”
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?”
Dell has been contacted for comment.