House of Fraser settles payment terms
House of Fraser has backed down in its dispute with a perfume supplier over its plans to raise payment terms to 75 days, Accountancy Age has learned.
The department store group agreed new payment terms with J Floris at a meeting last week. Although both refused to disclose details, the new terms are understood to be somewhere between 75 and 30 days.
The dispute surfaced after House of Fraser told J Floris and other suppliers it would be introducing new payment terms of 75 days and 3% interest from July. J Floris had said this was more than twice the length of the existing House of Fraser contract terms.
The 75-day terms are twice the length recommended by the Late Payment Act. It allows small suppliers to charge 8% interest above base rate on unpaid bills after 30 days, unless a prior agreement is reached.
Alan Toms, group finance director of J Floris, said the dispute highlighted the risks of companies trying to impose terms on suppliers. It is the most high profile late-payment dispute since the row that engulfed Rentokil Initial’s 60-day payment terms last year.
The House of Fraser’s concession to J Floris may encourage others to challenge the 75-day payment terms, according to business groups.
‘They could have a go at the payment policy,’ said a spokesman for the Federation of Small Businesses .
A House of Fraser spokesman said the dispute was not ‘an issue’ and relations with suppliers were ‘harmonious’.