Service suppliers whose contracts are coming up for renegotiation are seeing payment terms extending to 180 days as standard, up from 60 or 90 days previously.
Robert Downes, policy advisor at the Forum of Private Business (FPB), criticised the move: “Hitting suppliers with this at any time of year is bad, but to do it just before Christmas puts the tin hat on it.
“One hundred and eighty days is a breathtaking time to pay – that’s half a year. Frankly, those suppliers financially able to walk away should do just that. But as is often the case in these situations, particularly in the current climate, that’s just not possible for most.
“O2 should hang its head in shame over this scandal.”
A spokesman for O2 defended its actions: “Telefonica has a range of global payment terms which range up to 180 days. These terms have been in place in the UK since 2009, but it is possible that some suppliers, during contract renegotiation, will have seen these terms for the first time.”
Extending supplier payment terms are, however, something that many businesses are currently thinking about. The results of the Procurement Leaders Procurement Intention survey revealed that 23% of CPOs intend to increase payment terms over the next six months.
