Private business group attacks contractor for changing payment periods from 30 to 60 days
A business group has launched a scathing attack on contractor Rok over a decision to extend standard payment terms from 30 to 60 days.
The Federation of Private Business (FPB) said it had placed the firm in its “hall of shame” after a letter was sent by a Rok subsidiary to suppliers asking them to accept longer payment terms in new contracts.
A Rok spokesperson said the terms were being negotiated for new contracts only and stressed that arrangements for existing deals would stay the same. She said the move was bringing the firm in line with the rest of the industry.
Director of finance and administration at the FPB, Nick Palin, said: “Small businesses are bearing the brunt of the slump in the construction sector. It is not reasonable for big businesses to pass on costs incurred via changes to payment terms and conditions further down the supply chain.”
He urged Rok to sign up to the government’s new Prompt Payment Code, which binds firms to paying suppliers “on time without changing practice on length of payment for smaller companies on unreasonable grounds”.
In response to the FPB’s public statement, Rok said: “Rok is not changing its payment terms in respect of existing contracts, but has said that any new arrangements with subcontractors will be negotiated on the basis that our standard terms are now 60 days. In fact the vast majority of our suppliers are already paid on these terms which are in line with the majority of our industry.
“The only change we are making is to ask our businesses, where they are negotiating new contracts, to make it clear that 60 days is now the standard.
“Clearly it is not in our interests to upset or disadvantage our supply chain partners with whom we have excellent relationships and on whom we rely to help us deliver an efficient service which is why no changes are being made to existing arrangements and why the terms