Small business commissioner Paul Uppal has accused Holland & Barrett of having a “purposeful culture of poor payment practices”.
Uppal has published a report into poor payment practices displayed by Holland & Barrett, following a late payment complaint from a small business in December 2018.
The London-based technology consultancy submitted an invoice for £15,000 to the retailer for work it had completed on a search engine optimisation project, with agreed payment terms of 30 days. The firm contacted Holland & Barrett when the payment was not received.
After the complaint was raised with the small business commissioner, Holland & Barrett “refused to discuss the details of the delay” despite contacting the retailer’s procurement team and chief financial officer, Uppal said.
He said: “Holland & Barrett’s refusal to cooperate with my investigation, as well as their published poor payment practices, says to me that this is a company that doesn’t care about its suppliers or take prompt payment seriously.”
The payment was paid by Holland & Barrett on 10 January 2019, 28 days after the complaint was submitted to the commissioner.
The commissioner’s report also found 60% of invoices issued to Holland & Barrett were not paid within the agreed terms and the retailer takes on average 68 days to pay invoices.
In April 2018, the retailer was criticised by the Business, Energy and Industrial Strategy (BEIS) Committee over its poor payment practices.
Rachel Reeves MP and chair of BEIS Committee said: “Consumers would be appalled to hear that a big name on the high-street such as Holland & Barrett is treating their suppliers so shabbily. It is outrageous that a company takes on average 68 days to pay its invoices and pays 60% of them outside of agreed terms.
“These actions show that it is not only a parliamentary committee and the small business commissioner which Holland & Barrett hold in contempt, but small businesses too,” she said.
A spokeswoman for the retailer said: “Although embarrassing for Holland & Barrett, we appreciate the small business commissioner and parliamentary committee bringing attention to this important issue.
"Holland & Barrett aspires to be a partner of choice for suppliers, and thus its payment practices must be improved.
"On our path to improvement, we have already taken a number of steps. We have begun reviewing and updating all of our existing supplier contracts, and we will be actively reaching out to all partners to discuss how we can better meet our mutual commitments and build a sustainable platform for success.
"We have also invested substantially in digitalising the business through new technology, including the imminent roll-out of a new electronic payment system, which should improve current payment performance substantially and help ensure this type of issue will not occur again.
"Holland & Barrett is determined to eliminate late supplier payments – for the economy, for small suppliers, and for our own future success. We appreciate the work of the small business commission and look forward to working closely with the commissioner and others in government to ensure Holland & Barrett becomes a model of good practice."
Separately, the Cabinet Office has written to over 10,000 businesses to reiterate suppliers must be paid on time or risk being prevented from winning public contracts.
Suppliers who bid for government contracts above £5m per year, who cannot probe they are paying 95% of invoices within 60 days, risk being prevented from securing government contracts in new rules which will come into force in September.
The new measures will also level the playing field for small businesses, including an ambition to pay 90% of the government’s undisputed invoices from SMEs within five days.
Minister for implementation, Oliver Dowden, said: “Prompt payment is critical for all companies helping to deliver public services, particularly small businesses which are the backbone of our economy.
“That’s why, from September, if government contractors are late with supplier payments, they could be prevented from winning public contracts until they clean up their act.”
Malcolm Harrison, group CEO, CIPS, said: “Far too many large businesses use SMEs as a bank to prop up their own cash flow. Naming organisations who fail to pay their suppliers on time, is a step in the right direction but shame alone will do little to address the widespread practice of late payment in the UK. We need to encourage the best practice of prompt payment.
“Transparency over payment terms is clearly not enough, it is time for more punitive measures. The government must stop awarding contracts to businesses who don’t pay their own suppliers promptly. This would have a greater impact in stopping the unprofessional and unethical practice of late payment as delisted suppliers will not even be in the running for future business," he said.
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