Late payment can have a crippling effect on small firms and we continue to campaign against the practise of companies delaying payment.
As well as lobbying for tougher legislation and for businesses to sign up to the Prompt Payment Code, we name and shame large businesses which take advantage of their smaller suppliers by making retrospective changes to payment terms, effectively squeezing their suppliers. This has led to extensive media coverage and some businesses changing their terms.
See which big businesses we've recently put into the Hall of Shame below:
Forum questions Diageo on new finance scheme to cover poor payment practice
The Forum is questioning drinks giant Diageo on whether its plans to introduce a new supply chain finance scheme are a cover for extending payment times to suppliers.
This move from the leading UK drinks manufacturer has been openly presented to suppliers as a new scheme to improve company’s own cash flow and drive down its costs, according to documents obtained by the Forum. Diageo’s decision to extend their payment terms is not without precedent. In 2009 the company doubled its terms to 60 days, resulting in their inclusion in the Forum’s ‘Hall of Shame’.
Diageo now appears to have broken its commitment as a signatory of the Prompt Payment Code. This episode further highlights the need for urgent action in order to tighten the existing rules around the Code, the Forum believes.
We are a supporter of supply chain finance schemes in the right circumstances, but believe that such schemes should not be used as a justification for a company extending payment times to its suppliers. As a result, the Forum will be writing to Diageo to further clarify the extent of the changes for its supply chain. In addition we are consulting with the Institute of Credit Management and Department of Business Innovation and Skills to challenge Diageo’s status as a signatory to the Prompt Payment Code and will call for their removal.
A bitter pill to swallow as GSK uses 2013 to extend payment terms and demand rebates
The Forum of Private Business named and shamed the multinational company for increasing supplier payment times from 60 days to as much as 95, depending on the date invoices are received.
What makes the GSK case all the worse is the sheer size and profitability of the firm – the fourth biggest pharmaceutical company on the planet.
GSK said most vendors would be unaffected by the changes as to when invoices are settled and said it would be offering support to small suppliers. However, as a signatory to the Prompt Payment Code, the Forum thinks their supply chain ethics should be higher.
Debenhams airs its dirty laundry by extending payment terms and demanding rebates
Debenhams received its second entry into the Hall of Shame for extending its payment terms in 2013, paying some suppliers in as long as 120 days. If that wasn’t bad enough, the company also demanded a 2% reduction on invoices from some suppliers. Debenhams made the demand in a letter sent out to linen suppliers in which it also said it "expected" them to charge back to factories to make the required saving.
Having their cake and eating it: Premier Foods charging suppliers £5000 to be on a new preferred supplier list
In 2013, the Forum of Private Business slammed Premier Foods for demanding that small firms pay £5,000 if they wanted to be placed on a Preferred Supplier List for future contracts.
Premier Foods, fighting some substantial debts according to reports, wrote to suppliers of equipment and services telling them of plans to reduce the number of suppliers from 300 to 150. To cover the costs of this new programme they asked for payment of £5000 plus VAT.
The company implemented the scheme despite the Forum voicing its opposition.
A wolf dressed in sheep’s clothing – Monsoon extends payment terms by 63%
Monsoon entered the Hall of Shame in 2013 for both extending the payment terms for many suppliers and introducing an invoice discounting scheme to its suppliers. This scheme was non-negotiable and included a 4% supplier invoice discount in general, before prompter payment receipts attracted higher costs. Whilst trading conditions were tough the Forum of Private Business does not believe it's an excuse to introduce measures like this.
To enter a company into the Hall of Shame anonymously, email us at PublicAffairs@fpb.org, including any relevant background information and copies of letters/emails. We promise to retain your anonymity throughout the process.
To fight for prompt payment by big businesses to their small suppliers
We've put more than 30 big businesses into the 'Hall of Shame' and many have signed up to the Prompt Payment Code as a result
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