Dell has become the latest company to find themselves in the Forum of Private Business’s payment league table which serves as a ‘hall of shame’ for those companies whose payment terms are deemed unacceptable by FPB.
Dell suppliers have received communication to inform them that they will now face an additional 2 weeks waiting time before invoices are settled. This means that suppliers will now have to wait a total of 65 days before they receive payment. The communication stated that the “current economic conditions” were forcing the company to “standardise” payment terms for all of their “valued” suppliers.
The government has been striving to ensure that small firms have their invoices settled promptly but Dell’s decision is completely at odds with this. The FPB commented: “When they receive a letter like this, smaller suppliers have no choice but to agree and stay silent.”
One of the suppliers who received the communication stated: “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?”
FPB concluded: “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.”