We believe that there must be a balance between the need to attract the world’s biggest companies to Britain, ensuring we have the best environment for business, and protecting the interests of the UK’s hardworking independent small business people.
All small firms ask is to compete on a level playing field, but in some cases this is not happening. Change will only occur if we continue to ensure such poor business practices are questioned and don’t go unnoticed.
Below are just some examples of big businesses we’ve recently put into the Hall of Shame or reported on their bad business practices.
We are currently working with some companies on this list to remove them due to improved practices following pressure from the Forum, elected representatives, the media and most importantly their customers.
Probably the worst payer we have come across.
In November 2015 Carlsberg was entered for the third time into the Hall of Shame after an email from their Senior Vice President, Group Procurement emailed suppliers to inform them that there would be paid at the end of month +93 days (so-called C93).
In total they gave their suppliers two weeks to adjust to this change and when the Forum reminded them of the EU payment directive they assumed it did not refer to them.
5 years ago they were put in the hall of shame for forcing part of their supply chain into similar agreements. At the time these were the longest payment terms we had seen, although other food and drink manufacturers imposed similar terms during the recession.
The Forum will see whether the news Small Business Commissioner passes the “Carlsberg test”.
In January 2015 The Forum questioned 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 was 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 appeared to have broken its commitment as a signatory of the Prompt Payment Code and highlighted the need for urgent action in order to tighten the existing rules around the Code.
A supporter of supply chain finance schemes in the right circumstances, the Forum maintains that that such schemes should not be used as a justification for a company extending payment times to its suppliers.
As a result, the Forum wrote to Diageo to further clarify the extent of the changes for its supply chain.
In addition we consulted 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.
Our action resulted in Diageo making a U-turn saying that no small or medium-sized business supplier would be asked to accept 90-day payments and it would stick with a 60-day limit.
Member firms alerted The Forum to Mars UK’s intentions in April 2014 to introduce a supply chain finance scheme - which in effect would offer suppliers the option of being paid a reduced invoice within 10 days - to extend its payment times from 60 to 120 days.
This prompted The Forum’s policy team write to Mars and to question their plans and to consider placing the food giant in its late payment 'Hall of Shame'.
Ahead of the retailers annual shareholder meeting in May 2014 was contacted by a member with statements that the high street chain was calling on existing suppliers to invest significant sums of money in the growth of their business, a rebate of already agreed contractual payments in all but name.
As well as bringing this to the attention of the National media the Forum also wrote to the Competition and Markets Authority and urged them to launch an investigation into this activity.
A bitter pill to swallow as GSK extends 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 £5,000 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.
Monsoon were accused of failing to pay minimum wage in 2015, indicating a similar attitude to their employees that they show to their suppliers
Other businesses previously entered into the Hall of Shame include:
- Alliance Boots
- House of Fraser
- John Lewis
- United Biscuits
Don’t suffer in Silence! We can only stamp out unethical business behaviour if we don’t allow it to go unnoticed! Like other small firms who have refused to sit in silence, you too can help us influence real change and stamp out poor business practices like the above that have to the potential to break the backbone of UK business.
Help influence change today! To enter a company into the Hall of Shame email us at PublicAffairs@fpb.org including any relevant background information and copies of letters/emails, or call us on 0845 130 1722, or finally fill out the form below and we’ll get in touch. We promise to retain your anonymity throughout the process.