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25 February 2013 | Anna Reynolds
Fashion retailer Monsoon Accessorize is the latest company to be added to a 'hall of shame' that highlights businesses who extend supplier payment terms.
The Forum of Private Business (FPB) has criticised the company for a “shameless” squeeze on its supply chain after it informed new suppliers they will be subject to a mandatory 4 per cent invoice discount.
In addition, the company has extended its payment terms for all vendors by 50 per cent, from 60 to 90 days. The FPB has written to Monsoon asking it to reverse the increase and sign the Prompt Payment Code, a scheme where companies commit to pay on time and not change payment terms for an existing contract.
Robert Downes, spokesperson for the FPB said: “This is, quite frankly, a shameless attempt to negotiate cheaper prices for itself by increasing payment times and hanging on to cash owed to suppliers. This is also the first time we’ve see a big name brand using invoice discounting to extend payment times. The government may well be blushing at this since David Cameron publicly backed invoice financing as a useful tool to help small businesses improve their cash flow.”
The FPB also said Monsoon is offering suppliers the opportunity to be paid more quickly in exchange for discounts. For payment within seven to 10 days of goods received, the retailer is asking for a 10 per cent discount, or for payment within 30 days, a 5 per cent reduction.
Downes added: “At the end of the day, if supply chain prices are forced up as a result, it’s the consumer – Monsoon customers – who end up paying for its greed.”
Monsoon declined to comment on the allegations when contacted by SM.
Other companies that have been inducted into the FPB hall of shame include Sainsbury's and GlaxoSmithKline.