Probably the worst payer we have come across
Carlsberg has been entered into the Forums’ hall of shame on the 11th November 2015 for a record third term after giving their suppliers just 14 days to adjust to new payment terms, which were the end of the month plus 93 days.
In an email sent to suppliers in July, Bengt Erlandsson, Senior Vice President Group Procurement informed their suppliers:
“Carlsberg is adopting new payment terms. The new payment terms relevant are End of Month +93 days (so-called C93). Your current payment terms with us do not match the new payment terms.”
A subsequent letter to the Forum indicated that this was the correct and that Carlsberg was “surprised” that any of their suppliers would complain. They stated that suppliers could be part of their new supply chain finance scheme – for a price in order to “drive sustainability and build greater relationships with our key suppliers”
The letter also indicates that regulation in the UK is largely impotent as Carlsberg respond that “parties are free under English law to agree to payment terms longer than 60 days”.
Ian Cass, Managing Director at the Forum of Private Business commented: “The letter adds insult to injury. If a business is to take the Small Business Commissioner seriously then they will need to respond in a manner that will make them take notice. The companies key suppliers seem to be financial institutions and not the people who help them make and distribute their lager.”
Carlsberg was already in the hall of shame before they extended payment terms for some suppliers to 95 days in 2008.
Ruth Evans, Chief Executive of industry trade association BFBi, puts the actions of Carlsberg into context:
“The increasingly unsustainable payment terms being forced onto the supply chain are creating a situation beyond challenging. It is frustrating and disappointing to know that the consumer is protected from unfair practices brought about by the manufacturer but the supplier is not.
There is a difference between accepting long payment terms and being forced into them in order to be able to tender for business. The consequence of increasingly long payment terms (90 days are common, if not standard in some sectors) is ignored in favour of short term gains – a short-sighted approach and as far removed from “sustainable” as the offending “sustainable” companies can be.”
The Late Payment Hall of Shame can is part of the Forum’s own campaign to tackle the culture of poor payment in the UK.