G4S investigated over late payment practices

Outsourcing group G4S has been accused by the small business commissioner of “persistent late payment” towards one of its suppliers and its payment practices are being investigated.

In a report, the Small Business Commissioner says a business approached them in December 2018 regarding late payment fees in relation to a project undertaken for G4S. The small business submitted an invoice for £31,880.49 on 7th October 2018 based on contractually agreed 60-day payment terms. The payment was not received on the due date and the small business attempted to resolve this matter by initially emailing the G4S accounts payable team then subsequently by telephone without success. G4S confirmed that the invoice had been approved, however, could not provide confirmation of payment date.

G4S advised that this late payment was an isolated incident and was not a serial offence. G4S also advised there were several escalation routes available for the late payment to be resolved. Following this response, the small business submitted further information to the SBC evidencing the persistent late payment of previous invoices over an 18-month period. These invoices were not disputed nor was there an obvious cause for the delayed payments. G4S did pay late payment interest on all previous late invoices

Initially, G4S responded positively to the Commissioner’s investigation, stating the internal error was identified prior to the complaint. However, correspondence dated 2 January 2019 from G4S Finance Centre, confirms that payment was made on the same day SBC made contact. The small business’ invoice was paid 29 days outside of the agreed contracted terms. Moreover, G4S was provided with a further opportunity to investigate and respond to the new evidence provided by the small business, which contradicted earlier statements made by G4S. It is disappointing that G4S failed to carry out a more detailed investigation into the payment history on this case in the first instance.

The Commissioner made the following recommendations:

1. G4S review their procurement and accounts payable process to ensure they have robust processes in place to pay small businesses within the agreed payment terms;

2. G4S provides a single point of contact for small businesses to engage with when raising payment related complaints;

3. G4S to offer all small businesses 30-day standard payment terms in line with the Government’s commitment for strategic suppliers to pay promptly;

4. Small businesses who encounter similar issues with late payments should contact him to share their experiences.

Paul Uppal, Small Business Commissioner said “G4S is the largest outsourcing company in the UK and as a strategic government supplier they have a responsibility to lead by example and demonstrate timely payment practices to ensure small businesses are not left disadvantaged. “G4S claim to have transparent payment practices however, based on the factual evidence of this complaint it is clear that they have further steps to take to ensure they are consistently compliant in paying promptly. “The publication of my report should serve as a deterrent to other TIER 1 entities making similar omissions and encourage large business to adopt a responsible payment culture within their supply chain.”

Steve Poole, G4S Head of Transactional Services, said “G4S has over 5,000 suppliers in the UK and receives 250,000 invoices a year. We are committed to honouring the payment terms as agreed with our suppliers. We have also made a significant investment in our payment software, staff training and ticketing systems to ensure our suppliers are paid promptly. “G4S takes its responsibilities seriously regarding the payment of suppliers to support cash flow and their role within our supply chain. “G4S’s finance team had picked up the late payment error, which was then resolved prior to contact from the Small Business Commissioner. In this instance, the small business was paid the interest payment on the late invoices.”

The Prompt Payment Code (PPC) requires firms signed up to pay 95% of supplier invoices within 60 days.