We reveal the companies that are making the smaller business owner's life hell in our Hall of Shame ...

 

In June 2008, Computacenter, the leading IT service, wrote to its suppliers telling them it was doubling its payment terms from 30 to 60 days, giving them just days to respond. The change, which was enacted from July 2008, followed a 'study of commercial terms and conditions' between the company and its suppliers.
 
In the letter, Computacenter thanked its suppliers for helping to 'simplify and improve [our] supply chain operations'. The FPB condemns Computacenter for imposing this unilateral change in terms and conditions, particularly as suppliers are already being seriously undermined as credit becomes increasingly scarce.

 

 

Recently, the retail giant Matalan wrote to its suppliers to inform them it is paying 2% less on all invoices from 1 September 2008. Astoundingly, given the considerable difficulties faced by many small suppliers because of the credit crunch, the company's Buying Director, John Lyttle, revealed that the money saved will be used for TV advertising, marketing and PR and the refurbishment of stores. It will also fund Matalan's international expansion, and various other developments.

The retailer's decision to squeeze its suppliers echoes a move it made two years ago, when it imposed a similar 2% charge on invoices. Then, the FPB complained to Matalan and the Government. We are again writing to the company to ask it to explain its actions, and also registering a complaint with the Department of Business, Enterprise and Regulatory Reform (BERR).

 

 

The pharmaceuticals company, which has 3,000 retail stores across the UK, has written to its suppliers to inform them it is to extend its payment terms to 75 days from the end of an invoice, from 1 April, 2008. Effectively, if an invoice is issued on the first day of a 31-day month, it could be up to 105 days before they are paid. To make matters worse, it is also introducing a settlement charge of 2.5%.

 

 

In January this year House of Fraser decided that suppliers should help pay for their acquisition of the Beatties store group and the Jenners Portfolio. A discount of 3% would be taken for payment within 60 days but don't worry, suppliers had a whole month to come to terms with the changes!

 

 

After spending £10 million on a news distribution centre, implementing a new management system, investing £200k in relaunching their Wedding Gift Service and spending £1m on marketing, Heal's decided to carefully ‘revise' trading terms. There wasn't much care taken in handing suppliers a demand for a 7% discount on payment in 30 days.

 

 

 

In May 2007, InBev, the Belgium-based brewer of beers such as Stella Artois and Beck's, decided to extend its payment terms to 60 days after the month of invoice. It gave suppliers just one month's notice and said that it was part of the vision of moving InBev from 'biggest to best'. No doubt that was consolation to the companies that had to wait twice as long to get paid!

 

 

 

BHS decided in July 2006 that they would increase their already considerable demands on their suppliers. Payment terms were doubled from 30 to 60 days, meanwhile an additional 1% discount would be taken moving their discount rate up to a whopping 11.25%! 

 

 

 

No need to teach this firm a thing or two about squeezing suppliers. In July 2006 payment terms were increased to 45 days from the end of the month of invoice and a 2.5% discount introduced. To ‘help with the selection process' in the next year suppliers were told there would be no price escalation in the next 12 months.

 

 

 

Kleeneze wrote to suppliers in April 2006 to make sure that they had under a month's notice of changes to their payment terms. Thank you Kleeneze for your considerate approach! Payment terms were extended to 60 days, for those who wanted to be paid sooner Kleeneze were more than happy cough up the cash as long as a discount, which they would dictate, was taken from the invoice.

 

 

 

In January 2006 B&Q decided that they would place two increased delays in payment on their suppliers over the next two years. Initially it would rise to an average of 70 days in 2006 and an average of 90 days in 2007.

 

 

 

 

Those efficient folk at John Lewis took it upon themselves in November 2005 to completely review settlement terms across the entire business. Bravo! Achieving a ‘standard approach' applied in a ‘consistent manner' for all suppliers would mean an even playing field for them all. So those firms that weren't already complying were asked to knock 3% off their invoices if they wanted them paying on time. 

 

 

 

In August 2005 Betterware informed suppliers that for the honour of receiving payment in 7 days they would enforce a 7% discount on invoices. They also expected prices to be frozen for 12 months. 

 

 

Argos

 

Argos laid down the law to suppliers in April 2005, insisting that "It goes without saying that all discussions that take place between us are confidential. Under no circumstances should any information that is provided to you by us be disclosed by any third party." Looks like someone told the FPB! Not content with dictating payment terms, Argos wants to dictate codes of conduct at other firms! 

 

 

 

In January 2005 Homebase demanded that all suppliers provide all stock fill for new stores free of charge. This would include up to 20 new stores over 12 months.

The final demand was that they would reward themselves for the prompt payment of suppliers by deducting 4 percent from invoices that were paid on time!  

 

 

 

Every little helps. In November 2004, every little extra that suppliers could pay towards the cost of air freighting following stock shortages would help too. In a list of demands Tesco also said that suppliers holding 12 weeks of stock and giving 12 weeks notice if they stopped stocking a certain product line wouldn't hurt. The consequences for not meeting the demands would be refunds for loss of profit and loss of sales at full retail value.

 

 

Robert Dyas

 

The good folks at Robert Dyas the ironmongers wanted to celebrate their sale to Change Capital and the consequent expansion plans, but how would they do that? "Aha!", thought some bright spark, "Let's get the suppliers to pay for it!"

 

They demanded a 3% increase in margin for promotional and range", a 1 percent increase in ‘general advertising allowance rate‘, a 1% increase in ‘turnover rate' and 1% of turnover for their new store opening programme. According to the letter informing suppliers in April 2004 "…now is the time to demonstrate your commitment…" .

 

 

Poundstretcher (became '...instore' in 2007)

 

What a forward-thinking firm Poundstretcher is! On closing their Newport Pagnall warehouse and moving activities to Cross Green and a new distribution centre in Huddersfield they would save their suppliers a small fortune in haulage costs. It seemed only fair to ask suppliers pay a 2.5% discount from invoices for goods received after March 2004. 

 

 

 

TJ Hughes informed suppliers in March 2004 that after its management buy-out from JJB Sports it was "…reviewing areas of business with a particular focus on working capital management". This has to be one of the most creative ways of saying squeezing suppliers!

They more than doubled payment terms from 28 to 60 days from the end of the month. They also announced that for being such a good customer and paying on time (albeit 32 days later than before) they would be increasing the percentage they deducted for prompt payment from 6 to 8% of invoices.

 

 

 

Dress it up as whatever you want (Debenhams called it a ‘supplier rationalisation programme' in December 2003), what it meant for suppliers was extended payment terms to 60 days after receipt of the goods or invoice – whichever was the latter. Discounts were increased by 1% and retrospective discounts introduced.

 

 

Selfridges

 

Selfridges decided that payment terms would change in October 2003 and that suppliers would have to accept a 2.5% discount on all invoices that were paid within 30 days.

 

 

Woolworths

Woolies didn't want to get left behind in the discount stakes and decided in July 2003 to make sure it was keeping up with competitors it would impose a 2.5% discount on invoices. This wasn't just about keeping up with the Joneses, Woolworths admitted in a letter to suppliers that the money would help deliver a return for shareholders, very reassuring!

In January 2007, following a poor Christmas, Woolworths told all suppliers to give it discounts of between 2.5 and 5 per cent on their products.
As well as effectively doubling the value of discounts from some suppliers, Woolworths has extended its own payment terms to them from 42 days to between 45 and 50 days. Click here for more information.

 

 

In April 2003 Cargo Homeshop sent a letter to suppliers which said that after careful consideration of their ‘unblemished payment record of the last 2 years', it was about time to introduce a settlement discount to bring themselves in line with industry ‘best practice' and ‘norm'. Best practice! They also promised to review the discount in 12 months time.

 

By July 2006 payment terms had changed to 60 days and a 5% settlement discount.

 

 

S. F. Cody

 

Beware the ides of March – the warning to suppliers of SF Cody. In March 2003 payment terms were changed to a 2.5% discount on invoices paid 30 days after the end of the month or alternatively they would be paid without discount 60 days after the end of the month.

 

 

 

Changed trading settlement discounts, purchase rebates and listing fees (for inclusion in their high profile publications) in 2003. They also promised to detail new arrangements for page contributions, product quality and returns procedures. We bet suppliers couldn't wait!