Companies that pay late come under fire

By HELEN LOVELESS, MAIL ON SUNDAY ENTERPRISE EDITOR
Updated:

 

Sir Philip Green may have urged the Government to abandon its pledge to pay small business suppliers within ten days, but companies that try to push down supplier costs are increasingly coming under fire.

Philip Green

Philip Green: Urged the Government to abandon its pledge to pay small business suppliers within ten days

Outsourcing giant Serco was forced to back down last week after it wrote to nearly 200 of its suppliers, demanding a 2.5% cash rebate on contracts from the first half of the year.

After being widely criticised by politicians and business groups, Serco apologised for the letter and retracted its demands.

Financial Mail has regularly highlighted cases where big companies use their purchasing muscle to lengthen payment terms to suppliers, or levy rebates on contracts.

According to the most recent Late Payment Index compiled by credit reference agency Experian, companies are taking marginally less time to settle their bills, with firms paying an average of 22.61 days late in the third quarter of 2010 compared with 23.17 days late in the third quarter of 2009.

Joe Myers, head of commercial credit at Experian, says: 'News that the European Parliament has approved a 30-day deadline for businesses to be paid may encourage organisations to take a closer look at their payment performance.'

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