Rok has doubled its standard payment terms from 30 to 60 days for new suppliers, prompting criticism from small business organisation the Forum for Private Businesses.
A spokeswoman for Rok said that it was negotiating 60 day terms on new contracts, stressing that the moves did not affect exisiting suppliers: “[60 days is] the industry average and we are at a disadvantage if we don’t do that,” she said.
The FPB’s director of finance and administration 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.”
“In the current economic climate, this behaviour can force small firms to cease trading altogether. The FPB is campaigning to change the culture of poor payment in the UK and is urging to Rok plc to sign up to the Prompt Payment Code.”
The FPB quoted one of its members, who wished to remain anonymous, saying: “The company has said that these new terms and conditions will apply unless there are objections to them, but, in reality, how can you stand up to a business of Rok’s size? There’s no doubt that many smaller sub-contractors and their suppliers will struggle as a result of this move, but speaking out will simply result in Rok refusing to work with them again. It’s a no-win situation.”
A full statement from Rok read: “Rok is not changing its payment terms in respect of existing contracts but has said that any new arrangements with sub contractors 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 for all new arrangements will be made clear from the outset.”