McLean Homes, one of the UK’s leading construction companies, has pledged to review its 90-day payment policy after it was exposed in the last issue of Accountancy Age.
In a circular issued in November, the South Midlands office of McLean Homes outlined ‘revised’ payment terms for 1999, starting at 60 days and reaching 90 days if the supplier’s invoice arrived in the last week of a month. This was intended to tie in with ‘strict accounting deadlines’ used by McLean, which is part of the Wimpey Group.
The Late Payment Act stipulates that companies must pay their suppliers within 30 days of receiving their invoice, unless an agreement between the two parties was reached by the end of last November.
Terry Coles, divisional chief accountant for McLean, admitted it had been a mistake for the South Midlands office to issue the circular. He added that the group payment policy included weekly and monthly agreements with subcontractors. It was reviewing whether to send out a new circular.
Despite McLean’s rethink Rentokil Initial remained defiant over its 60-day payment terms. It is still under threat of investigation by the Better Payments Practice Group, and faces expulsion if it is found in breach of the Act.
Companies which impose excessive payment terms on their suppliers will come under further pressure later this month when the Federation of Small Businesses publishes a league table giving the average payment time of the UK’s 13,000 plcs by industry sector.
A report published last month by credit management consultancy Experian highlighted a national increase in late payment, with companies taking nearly one day longer since May to pay their bills.
In a survey of over 212,000 companies, the largest companies in the water utilities sector took the longest to pay their bills. The average was 75 days.
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