IT giant Dell is to extend its payment terms from 50 days to 65 days, blaming the recession for the change.
Dell has written to its suppliers to tell them of the extra delay in receiving payment, effective from July 10.
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?”
The action has earned Dell a spot in the Forum of Private Business (FPB) Hall of Shame.
FPB 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.
Dell 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.
According to FPB’s latest Economy Watch survey, almost one in five small firms said the problem of late payment and changes to payment terms and conditions has become worse. On average, 36 per cent of respondents’ turnover is tied up in late payment at any one time.
Further research carried out by FPB showed 37 per cent 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.
FPB 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.”