Dell Earns Place In Late Payment Hall Of Shame
By Doug Caverly – Mon, 06/28/2010 – 2:32pm.
Bad news for small suppliers
Most people and companies pay for products and services as soon as they use them. Or at least within a month when the bill shows up. A corporation with a market cap of over $25 billion is insisting that its suppliers wait longer, however, earning Dell a place in the Forum of Private Business’s “Late Payment Hall of Shame.”
Small businesses, beware: the FPB reported this morning, “Dell, which is one of the world’s leading information technology companies, 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.”
That’s bound to put a lot of smaller firms in a tough spot, since by arguing, they might risk losing Dell’s business entirely.
The FPB stressed that late payments are a big deal, though, citing research conducted by Bacs. This payments industry nonprofit determined that small businesses in the UK are owed about $30 billion in outstanding payments right now.
Perhaps Dell’s decision will help put a spotlight on the problem, then. Even if the corporation isn’t embarrassed to the point that it actually reverses course, other organizations may now choose not to follow its path.
Also, here’s a reminder from the FPB: “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.”