Late payment 'Hall of Shame' entries 2008
Computacenter
In June 2008, Computacenter, the leading IT service, wrote to its suppliers telling them it was doubling its payment terms from 30 to 60 days, giving them just days to respond. The change, which was enacted from July 2008, followed a 'study of commercial terms and conditions' between the company and its suppliers.
 
In the letter, Computacenter thanked its suppliers for helping to 'simplify and improve [our] supply chain operations'. The FPB condemns Computacenter for imposing this unilateral change in terms and conditions, particularly as suppliers are already being seriously undermined as credit becomes increasingly scarce.
 
Matalan
Recently, the retail giant Matalan wrote to its suppliers to inform them it is paying 2% less on all invoices from 1 September 2008. Astoundingly, given the considerable difficulties faced by many small suppliers because of the credit crunch, the company's Buying Director, John Lyttle, revealed that the money saved will be used for TV advertising, marketing and PR and the refurbishment of stores. It will also fund Matalan's international expansion, and various other developments.
 
The retailer's decision to squeeze its suppliers echoes a move it made two years ago, when it imposed a similar 2% charge on invoices. Then, the FPB complained to Matalan and the Government. We are again writing to the company to ask it to explain its actions, and also registering a complaint with the Department of Business, Enterprise and Regulatory Reform (BERR).
 
Alliance Boots Ltd
The pharmaceuticals company, which has 3,000 retail stores across the UK, has written to its suppliers to inform them it is to extend its payment terms to 75 days from the end of an invoice, from 1 April, 2008. Effectively, if an invoice is issued on the first day of a 31-day month, it could be up to 105 days before they are paid. To make matters worse, it is also introducing a settlement charge of 2.5%.
 
House of Fraser
In January 2008 House of Fraser decided that suppliers should help pay for their acquisition of the Beatties store group and the Jenners Portfolio. A discount of 3% would be taken for payment within 60 days but don't worry, suppliers had a whole month to come to terms with the changes!
 
Heal's
After spending £10 million on a news distribution centre, implementing a new management system, investing £200k in relaunching their Wedding Gift Service and spending £1m on marketing, Heal's decided to carefully ‘revise' trading terms. There wasn't much care taken in handing suppliers a demand for a 7% discount on payment in 30 days.