A second leading UK company has fallen foul of the Late Payment Act after a small supplier objected to its revised 60-day payment policy issued in a circular last month.
An 11 November circular to suppliers McLean Homes, part of the Wimpey construction group, outlined a ‘revised’ payment policy of 60 days, reaching 90 days if the supplier’s invoice arrived in the last week of a month.
The circular ends: ‘Thank you in anticipation of your co-operation.’
Neither McLean Homes nor Wimpey are signatories of the government-sponsored Better Payment Practice Code.
The latest controversy came as Rentokil Initial faced expulsion from the Better Payment Practice Code if a Department of Trade and Industry investigation decides its 60-day payment policy to small suppliers breaks the 30-day payment protection of November’s Late Payment Act.
Sir Clive Thompson, Rentokil’s chief executive, has been called on to resign as president of the CBI, a Better Payment Practice Group sponsor.
A small supplier of South-Midlands-based McLean Homes claimed the company’s circular was attempting to ‘dictate’ payment terms to small companies. It added that McLean Homes did not say if it would pay interest to small suppliers on overdue bills. ‘It is difficult to see how this can be fair to small business,’ said the aggrieved supplier.
In a written statement, Steve Wright, financial controller of McLean Homes, responded: ‘The letter was issued to all our suppliers as a guideline to establish payment procedures for 1999. Where suppliers have expressed concern over this scheme we have negotiated terms on an individual basis.’
Two out of the three accountancy institutes which are members of the BPPG have also raised concerns over the ongoing late-payment furore.
David Harvey, secretary of ACCA’s small business committee, said: ‘If the facts about Rentokil are true, any company with such an appalling payment record should resign.’
Tony Dart, technical director for CIMA, stressed that payment terms should be negotiated by partners who have equal bargaining power.
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