Payment delay lands Dell in FPB's 'hall of shame'

7 July 2010

7 July 2010 | Angeline Albert

Suppliers to Dell have been told they may have to wait a further 15 days to get paid on top of an existing 50-day payment agreement, after the IT giant decided to standardise payment terms.

Dell sent an email to vendors to inform them that their payment terms would be extended to 65 days, effective from 10 July.

After reading Dell’s communication, one supplier said: “As a ‘valued’ supplier of IT services to Dell I was dismayed to receive this notice via email regarding a change to their payment terms. Ironically, the reason for the change is apparently due to the current harsh economic climate. How is extending payment terms beyond the current draconian 50 to 65 days going to help Dell’s legion of ‘valued’ SME suppliers, particularly when most of our suppliers demand 30 days net?”

In a statement, Dell said: “The 65-day payment term is being put in place on a global basis for Dell’s non-production procurement, which includes telecommunications companies, insurance companies, financial services and services vendors. The change is being made to fully standardise Dell’s payments; the company’s production procurement is already on a 65-day schedule.

“The standard does not apply to certain exempted diverse suppliers, including many certified small vendors, whose terms can be shorter, generally ranging from 20 to 45 days. The standard does not apply in countries where there are restrictions; some examples include France, Japan, Korea, India; or in some countries in which credit costs are extremely high (Brazil).”

The news prompted the Forum of Private Business (FPB) to put Dell into its late payment “hall of shame”. FPB spokesman Phil McCabe said: “Companies like Dell have a responsibility to pay promptly – failure to do so can mean the whole supply chain seizes up.”

Dell has been invited by the FPB to sign up to the government’s Prompt Payment Code.

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