A Mars a day, helps you work, rest and not get paid
The decision by Mars to double its supplier payment terms has been greeted with anger by the UK’s largest independent commercial finance broker after it has received complaints from businesses concerned about the impact on their cashflow.
Touch Financial says it has received calls from a number suppliers to Mars and similar businesses in the last week, seeking advice following the confectioner’s move to extend payment terms from 60 to 120 days, but couching the extension within a new scheme that offers suppliers a chance to be paid within ten days – if they accept a lower value for their invoice.
Simon Carter, Director of Touch, says that the move has every hallmark of a major customer bullying its smaller suppliers: “We recommend and arrange various supply chain finance schemes to a good many businesses,” he says, “but in this case the suppliers are clearly being disadvantaged.
“We are already working with many of the suppliers affected to find new means of cashflow finance, principally through factoring, which will enable them to receive up to 80 percent of the invoice value immediately, and the balance once the amount is settled. That way they can keep the cash flowing through their businesses, and not be held to ransom by their larger customers.”
The decision by Mars, reported on the just-food today website last week, has already been condemned by The Forum of Private Business who expressed concerns about the impact of lengthy payment terms on small businesses.
A spokesperson for Mars claimed that the business values its relationships with suppliers: “We are in the process of communicating the details of the new terms that we believe will offer suppliers greater flexibility."
Mars is not a signatory to the Government’s Prompt Payment Code (PPC), administered for the Department of Business, innovation and Skills (BIS) by the Institute of Credit Management (ICM).
Philip King, Chief Executive of the ICM, says that bigger businesses should be doing more to protect their supply chain: “Treating suppliers well will ultimately be to the advantage of both supplier and customer alike,” he says. “The Prompt Payment Code is clear in its intention to improve the payment culture in the UK, and it is interesting to note that Mars has not as yet been willing to engage.”