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Big businesses, bad attitude

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At present, only eight FTSE 100 companies have signed up to the Code. Despite the FPB writing to a host of companies in the past year to complain about their treatment of suppliers, not a single one has replied to address these concerns. “The problem has not been the initiative itself but the attitude of big businesses towards it,” said Phil Orford, chief executive of the FPB. “Not only are many of these companies failing to acknowledge the principles of better payment practices enshrined in the Prompt Payment Code, they are refusing to account for their actions at all. The government’s efforts will be undermined unless the culture of indifference towards smaller suppliers is addressed.” He added: “It is vital that FTSE 100 companies sign up without delay in order to nurture the certainty and stability that is lacking for small businesses.” Last week, the retailer Argos – which is owned by the FTSE 100 listed Home Retail Group – was the latest company to be entered into the FPB’s Hall of Shame for squeezing its suppliers – four years after it first appeared there. On 9 April 2009, the FPB wrote to Terry Duddy, Home Retail Group’s chief executive, inviting him to sign up to the Prompt Payment Code. To date, no reply has been received. However, following coverage of Argos’ entry into the FPB’s Hall of Shame on the BBC’s Working Lunch, the retailer denied receiving a letter from the FPB, saying: “We have been moving towards standardising our payment terms across our business and we believe that our standard payment terms are now in line with the marketplace.”

Yeah, right. Other companies "named and shamed" during the past year include InBev and Diageo, the world’s two largest alcoholic drinks companies, IT infrastructure services provider Computacenter, Matalan and pharmaceuticals giant Alliance Boots. Under the Late Payment of Commercial Debts (Interest) Act 1998, small businesses can, in theory, charge for late payments. But few take advantage of this or are prepared to speak out publicly for fear that large companies will simply take their business elsewhere. According to the results of the FPB’s latest Economic Downturn Panel survey, late payment was deemed to be one of the most significant barriers to economic recovery. Although one in four respondents (26 per cent) reported an improvement in markets for products and services (slightly more than the 23 per cent reporting a decline), 56 per cent of FPB members said late payments had worsened, with 24 per cent reporting increased cash flow difficulties as their "key issue".

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