Dell gets a slap on the wrist for extending payment time to suppliers

Dell has had a rap on the knuckles, but this time it’s not from Greenpeace. Instead, the computer giant has been entered into a late payment Hall of Shame by the The Forum of Private Business.

The action occurred after the organisation found that Dell had extended the time it takes to pay suppliers by 15 days. It said it 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 Prompt Payment Code, where signatories pledge to pay suppliers on time, give them clear guidance and encourage good practice throughout the supply chain.
The Forum said its research figures showed that 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 showed that 37 percent 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.
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?”