Late Payment - DTI slated for poor protection

The Rentokil Initial supplier at the centre of the storm over the Late Payment Act slammed the trade department this week for failing to offer small businesses adequate payment protection.

The Act lets small suppliers charge large companies interest of 8% above base rate on unpaid bills after 30 days if no agreement was reached before 1 November.

Referring to the Rentokil’s 60-day payment terms – which led to calls for Rentokil’s chief executive Sir Clive Thompson to resign as president of the CBI – the supplier, who asked not to be named, said: ‘We wrote to the DTI complaining about the payment terms and it said one remedy was to take large companies to court.

‘But the costs before you even get to court are horrendous. I don’t see the point of the Act – it’s so woolly. Small suppliers should complain to the DTI.’

He said the company had not signed a written payment agreement with Rentokil and it was unclear what would happen if it charged Rentokil an 8% interest rate on unpaid bills after 30 days.

In November, Rentokil increased its interest rate paid on late bills from 1% to whatever bank charges are faced by the supplier. The call came as the government-sponsored Better Payment Practice Group met earlier this week to agree a complaints procedure to determine whether a member is breaking the Better Payment Practice Code.