m of Private Business has criticised food manufacturer MarsUK for extending the timeframe in which it pays suppliers in the UK.The forum claims that Mars qualifies because it is using a variation of a supply chain finance scheme as cover for extending payment terms to suppliers.
A spokesperson for the forum told The Times that it was acting on the basis of an anonymous letter of complaint it had received.
The letter revealed that payment terms are being extended from 60 to 120 days, but suppliers are being offered the option of being paid a reduced amount within 10 days.
The practice is becoming more widespread as companies attempt to protect cash flow and companies display more impatience at government delays in meeting promises to introduce measures to regulate late payment.
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.
“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.”
