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14 January 2013 | Anna Reynolds
The Forum of Private Business (FPB) has accused GlaxoSmithKline (GSK) of “corporate greed” after changes to its payment procedure could mean suppliers have to wait up to 90 days to be paid.
But the pharmaceutical company told SM that most vendors would be unaffected by the changes to when invoices are settled and said it will be offering support to small suppliers.
The company’s previous policy was to pay supplier invoices 60 days from the time they were received. But now payments will be made on the first day of each month after 60 days has passed. The business said the changes will make payment terms more consistent and provide more certainty for suppliers.
“For most suppliers, the changes we have made to our payment terms will have little to no impact if they submit their invoices towards the end of the month,” a statement said.
The company added that vendors will be treated case-by-case and that shorter payment schedules are available. “We greatly value the relationships we have with our many suppliers and understand the pressures on cashflow and financing being faced by smaller companies at this time. This is why, for smaller companies, we have a number of schemes in place to help them, including alternative payment schedules and offering supply chain finance,” it said.
However, the FPB attacked the company, describing its actions as “morally bankrupt”. Robert Downes, spokesperson for the organisation, said: “What makes the GSK case all the worse is the sheer size and profitability of the firm - the fourth biggest pharmaceutical company on the planet. This is not a business struggling to make its way in the world.
“Most people will see this as the worst type of corporate greed imaginable. GSK can’t even argue that it’s not got past form. Only two years ago, it increased supplier payment terms to 60 days, and now this. It is relentless.”
Downes warned that GSK and others are setting a bad example to other companies, which will think this is acceptable. “It’s not, it never will be and it’s high time big business started treating the army of small businesses that supply them with some respect,” he said.
GSK is a signatory to the Prompt Payment Code.