In a letter received by Computer Reseller News (CRN), dated 12 June 2008, which has been seen by the FPB, Computacenter gave its suppliers just days to respond to the change in terms and conditions. In addition, it thanked them for helping to 'simplify and improve' its supply chain operations.

Among Computacenter's customers are a number of government agencies, including the Environment Agency (EA), and several local authorities. The change, which was imposed unilaterally from 1 July 2008, followed a 'study of commercial terms and conditions' between the company and its suppliers.

"Smaller suppliers across all sectors, including the IT industry, are struggling because of the economic downturn. Unilateral changes to payment terms, and the late payment of invoices, seriously impact on the health of small businesses, particularly as traditional credit facilities increasingly come under threat," said the FPB's Chief Executive, Phil Orford. "The Government has pledged to pay its suppliers on time. As a business supplying both the private and public sectors, Computacenter – and large companies like it – must adopt a similarly responsible attitude towards small businesses. That means paying them promptly and refraining from imposing potentially damaging changes to terms and conditions. The consequences of them not doing so could be severe for many small firms."

In August 2008, the FPB called on the Government to urgently address unilateral changes to payment terms and the late payment of invoices. It urged the Government to set an example and pay its own suppliers on time, arguing for a payment code of conduct for both public and private sector organisations, and that systematic late payment should be labelled as an unfair business practice.

The move followed an FPB survey on payment issues, in which more than 94% of respondents agreed that the Government should pay its suppliers on time. In addition, 88% revealed that their bigger customers were not paying them within contractually-agreed periods, with 72% claiming that this was having a ‘serious' or ‘very serious' impact on their businesses.

Almost one in three (32%) respondents said they were owed between £1,001 and £5,000 – significantly impacting on cash-flow - and 56% stated that late payment has become worse over the past year. In addition, the majority of the members of the FPB responding to the survey (72%) said that the standard payment period set out in their contracts is 30 days.

At a meeting with civil servants at the Department for Business, Enterprise and Regulatory Reform (BERR) in September, the FPB's Policy Representative, Matt Goodman said that, for small businesses struggling in the current economic climate, receiving timely payments often meant the difference between trading profitably or not at all.

In response, the Government announced it would pay its suppliers within 10 days, and agreed to tackle the ongoing problems associated with business-to-business payments. In October 2008, it pledged to:

- map communication channels used by membership organisations

- work to identify potential ‘payment champions' to develop key messages

- explore options for taking the prompt payment message out to business

- explore ways of promoting and making available affordable credit management training and support.

BERR is about to publish a series of electronic guides for small businesses, aimed at helping them with late payment and credit management In general. The FPB, which believes the measures fall short of what is required, is pressuring private sector companies to pay smaller firms responsibly.

"It was agreed that the way forward must not lead to more regulation, which would simply add to another major problem for small firms. What is needed is a change in the culture of payment," said Mr Goodman.

Currently, small firms have a statutory right to interest (SRI) under the Late Payment of Commercial Debts (Interest) Act 1998, allowing them to charge interest on the debts they are owed. However, the FPB is concerned that many fail to exercise this right because they fear that the larger businesses will simply refuse to deal with them again.

The FPB's Hall of Shame includes companies which squeeze their suppliers by imposing unilateral contractual changes and ‘settlement discounts' on invoices.

The FPB has outlined the views of members in a paper to the European Commission on late payment and is protesting against payment abuse as part of its ‘Think Smallest First' campaign.

Computacenter has more than 9,000 employees across Europe and group revenues of over £2.2 billion. For more information about the other companies ‘named and shamed' by the FPB, visit www.fpb.org/hallofshame.