In May last year, Mars said that it planned to introduce new terms and was in the process of communicating with UK suppliers. Today, it confirmed that it had extended payment terms for some suppliers.
Mondelēz also said it had extended payment terms, but only with some of its larger UK suppliers.
‘Hugely damaging’
The Forum of Private Business (FPB) argues that the extended payment terms serve to harm small businesses.
“We are very concerned, but sadly unsurprised, to learn that Mars UK has finally decided to extend its payment terms, for some of its suppliers. This is hugely damaging for small businesses,” said Phil Orford MBE, chief executive of FPB.
Growing trend
He said that more and more large businesses were extending payment terms to protect their own cash flow at the expense of smaller companies.
Our sister publication BeverageDaily recently reported that drinks giant Diageo this week had also upped supplier payment terms from 60 to 120 days.
“At a time when the economic outlook remains uncertain it is fundamentally unfair that small businesses are being used as a line of credit for larger organizations and propping up big business,” said Orford.
“Along with Mondelēz and Diageo, this is yet another example of the supply chain abuse that threatens to break the backbone of the British economy – small businesses. The need for assertive action from policy makers to fix the broken big business ethics culture in the UK is self-evident," he continued.
Mondelēz: Only for some larger suppliers
Cadbury owner Mondelēz confirmed that it had extended payment terms for some larger suppliers.
Tony Bilsborough, head of UK external communication at Mondelēz UK, said: “Mondelēz International pays its suppliers in accordance with the agreed payment terms, those who have 60 day payment terms are paid within 60 days. In fact, we have a large number of suppliers who are paid within 30 days. As many other businesses have done, we have negotiated with some of our larger suppliers extended payment terms within the relevant UK legal parameters.”
Mars: Supplier financing program
The Forum of Private Business is hoping to arrange a meeting with Mars to clarify the company’s position. The small businesses campaign group said it was tipped off by a member company that Mars was being paid within 15 days by its own customers, according to its accounts.
A Mars spokesperson said: “For some suppliers, Mars has introduced extended payment terms together with a supplier financing program, which allows suppliers to receive payment earlier, improve cash flow and reduce administrative costs, among other benefits. This program is being introduced gradually for suppliers in the packaging, raw materials and indirect sectors.”
Mars said the payment terms would not be imposed all suppliers. "Mars will always work with each supplier individually. To clarify, we continue to work with some suppliers who chose not to accept the new terms and our offer of supplier financing,” said the company’s spokesperson.