MarsUK using supply chain finance scheme to cover poor payment practice says the FPB
Food giant MarsUK is the latest company to introduce a supply chain finance scheme as cover for extending payment times to suppliers and looks set to be placed in the Forum of Private Business’s Late Payment Hall of Shame.
This move from the leading UK food manufacturer to double its supplier payment terms from 60 to 120 days is bad enough, but the company is couching the extension within a new scheme that offers suppliers that chance to be paid a reduced invoice within ten days.
The lobby group for small business says Debenhams and Monsoon have carried similar, cynical exercises in the past twelve months.
Commenting on MarsUK, Phil Orford MBE, chief executive of the Forum of Private Business, said: “Whilst the Forum of Private Business is a great supporter of supply chain finance schemes in the right circumstances, they should not be used as a justification for a company extending payment times to its suppliers.
“We are concerned to learn that MarsUK is doing just this, extending payment times up to 120 days for some of their suppliers. Lengthy payment terms can be extremely damaging for small businesses. Whilst the supply chain finance scheme allows them to be paid quicker, it is at a cost. If suppliers want the full invoice they are entitled to they will have to wait 120 days.
“The practice of using a supply chain finance scheme in order to extend payment times is happening more frequently. Both Monsoon and Debenhams have carried out similar practices in recent years. GlaxoSmithKline and Premier Foods have both charged suppliers a one-off fee simply to continue to be considered as preferred suppliers for their businesses. At a time when our economy is beginning to grow again it is fundamentally unfair that small businesses are being used as a line of credit for larger organisations.”
“The government is considering how to respond to a late payment consultation that closed in January. The actions of MarsUK couldn’t be better timed to demonstrate to government this is an ongoing and serious issue.”
The Forum of Private Business has written to MarsUK to clarify the extent of the changes for suppliers.