O2 will not pay up for six months
Dec 16, 2012 (Financial Mail on Sunday - McClatchy-Tribune Information Services via COMTEX) --
THE mobile phones giant O2 has been criticised for forcing suppliers to wait a record 180 days for payment.
Suppliers whose contracts have come up for renegotiation have seen their payment terms rise from either 60 or 90 days to a staggering 180 days -- meaning they must wait for six months after supplying goods or services before they are paid.
These are believed to be the worst payment terms to be introduced by any company operating in Britain.
Experts estimate that small and medium-sized businesses are owed tens of billions of pounds in late payments by bigger firms. Over the past few years major companies -- including Carlsberg, Sainsbury's and Dell -- have all extended the time they take to settle suppliers' bills.
Robert Downes, policy adviser at the Forum of Private Business, said: "Hitting suppliers with this at any time of year is bad, but to do it just before Christmas really smacks of the modern day Scrooge.
"Those suppliers financially able to walk away should do, though in the current climate that's just not possible for most. O2 should hang their heads in shame."
Business Minister Michael Fallon last month wrote to companies in the FTSE 350, warning that they would be "named and shamed" if they did not sign up to the Prompt Payment Code. Firms agreeing to abide by the code commit to making payments on time.
A spokesman for O2, which is owned by Spanish telecoms giant Telefonica, said: "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."
The increased payment terms, combined with a recent rise in the charges on pay-monthly mobile phone contracts and the sale of its German subsidiary, have fuelled suggestions that Telefonica is in financial trouble. However, the spokesman said the speculation was incorrect.
O2's no-frills SIM card-only business giffgaff is facing a growing number of complaints from customers following failures of the system.
Since last month, many customers -- who use pay-as-you-go SIM cards on cut-price tariffs -- have been unable to make or receive calls or texts.
For full report, go to fmwf.com.
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