PracticeConsultingLate payment fight deepens

Late payment fight deepens

House of Fraser was locked in a meeting with a perfume supplier over its controversial plans to raise its payment terms of 75 days, as Accountancy Age went to press.

Last month the department store chain became embroiled in an embarrassing late payment dispute with suppliers after Accountancy Age revealed that, in at least one case, it plans to double the length of time it seeks to pay its bills.

The new payment terms are more than twice the length recommended by last year’s Late Payment Act and according to the supplier, perfumery manufacturer and retailer J Floris, more than double the existing contract time.

The terms are also substantially longer than Rentokil Initial’s 60 day payment terms, which led to calls for its chief executive, Sir Clive Thompson, to resign as CBI president.

The new terms of 75 days, to be introduced in July, offer suppliers interest of just 3% above base rate. The Late Payment Act allows small suppliers to charge 8% above base rate on unpaid bills, unless prior agreement has been reached.

House of Fraser said the revised terms would end the confusing variety of existing payment terms and create a more efficient payment system for suppliers.

However J Floris believes the terms break UK contract law and refuses to accept them. If necessary, the company said, it would consider its legal position regarding the issue.

Alan Toms, group finance director of J Floris, said: ‘We’re hoping that House of Fraser will end up with payment terms near to the original.’

Nick Goulding, policy director at the Forum of Private Business, said that the unilateral change to payment terms made by House of Fraser, may break a clause of the Late Payment Act if shown to be a deliberate attempt to circumvent the legislation.

House of Fraser said there was no question that it would breach late payment law.

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