Controversial payment policy to remain, but compromise offer of higher interest rates as compensation for late invoices.
Rentokil Initial is to stick by its controversial 60-day payment policy but will offer suppliers a higher interest rate as compensation for late invoices, Accountancy Age has learned.
In an 11 March circular to suppliers, Rentokil insisted it would not change its 60-day payment policy which has been in place for over ten years. But in a partial climbdown, the FTSE-100 company will pay small suppliers interest up to 8% above base rate – unless its cost of borrowing is lower.
It is Rentokil’s first official adjustment to its payment policy since the company’s circular in October which enforced 60-day payment terms and an interest rate of 1% above base rate on unpaid bills.
The controversy led to calls for Sir Clive Thompson, Rentokil’s chief executive, to resign as president of the Confederation of British Industry.
Rentokil Initial is also a signatory of the government-sponsored Better Payment Practice Group.
November’s Late Payment Act allows small companies to charge an interest rate of 8% above base rate on unpaid bills after 30 days if no prior agreement had been made before November.
The small Scottish supplier which sparked the late payment row dismissed Rentokil’s policy change, adding: ‘This reinforces its stance and it’s trying to weasel out of the Act.’
The Forum of Private Business, which has called for Rentokil to be banned from using the BPPG logo, said the wording of the circular could still allow Rentokil to pay suppliers interest at a lower rate than the 8% demanded by the Act.
A Rentokil spokesman said the company had sent a copy of the circular to the BPPG which had described the revised terms as a ‘substantive remedy’.