Northgate blasted over payment policy

Northgate has increased its payment terms to 60 days

Public sector VAR Northgate Information Solutions has been entered into the Federation of Private Business’s (FPB’s) Hall of Shame for its “poor payment practices”.

Northgate wrote to suppliers last month informing them that, from July, it will be taking 60 days to settle invoices. They were given 10 working days to object.

The FPB branded the move “disappointing”, claiming it will hit some of Northgate's smaller suppliers.

Northgate has now been added to the FPB’s Hall of Shame, which already features corporate reseller Computacenter and high street giants such as Matalan and Argos.

One anonymous FPB member, who has seen his business payment terms doubled from 30 days by the move, expressed concern that large companies are bullying their smaller suppliers.

“I would be delighted if public opinion turned against this kind of behaviour before it’s too late,” they said. “Quite clearly, firms that have previously relied on credit from their banks are now relying on being paid promptly and will suffer greatly if they are not.

“The problem is that bigger companies have the muscle to be able to do this, whereas smaller suppliers have little bargaining power. We're all in this together; they should get their finger out and stop this kind of behaviour.”

Northgate said in the letter that the 60-day timeframe was being introduced to ‘standardise’ payment terms across its supply base.

In response to the FPB’s move Northgate added that its own customers had extended payment terms recently and that it had had to pass on the arrangement to suppliers. It also stressed that suppliers had a choice of whether to accept the changes or not.

However, the FPB's chief executive, Phil Orford, said: “Although we can sympathise with the company's claim that it is not being paid on time by many of its public sector customers, it is disappointing that it is passing on these additional costs to its small suppliers, including members of the FPB."

Orford added that the FPB had written to Northgate inviting it to sign up to the government’s Prompt Payment Code.