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Top brewer entered into late payment ‘Hall of Shame’

20 September 2010

The company behind leading beer brands Carling, Grolsch and Cobra has been exposed for extending its supplier payment terms to well over three months, says Forum of Private Business

Molson Coors, which also brews Sol, Worthington’s and Coors Light, recently wrote to its suppliers informing them their invoices wouldn't be processed for more than 90 days from receipt. This means smaller businesses which rely on Molson Coors for work may end up waiting more than a quarter before receiving any payment for their products and services.

The change took effect this month (September) and was highlighted by a business owner who wrote to the Forum of Private Business – a not-for-profit support organisation for smaller firms – about the issue.

The self-employed tradesman, who asked to remain anonymous for fear of jeopardising future business opportunities, said he could no longer afford to carry out contracts for Molson Coors as a result of the changes.

In a letter to its suppliers, Molson Coors blamed the move on the need to invest and said extending payment terms would make the company “more consistent with the industry standard”.

But the Forum argues that bad payment practice among other companies is no excuse for big businesses to squeeze their suppliers. Forum Chief Executive Phil Orford has written to Molson Coors urging the firm to reverse its decision and sign up to the Prompt Payment Code.

The Forum has now entered Molson Coors into its late payment ‘Hall of Shame’ – an online directory of big businesses which have put their suppliers under pressure by forcing extended payment terms upon them.

Forum spokesman Phil McCabe said: “We're disappointed yet another big business has seen fit to profit at the expense of its struggling small suppliers.

“Maintaining a healthy cash flow is hugely important to small businesses, especially in the current economic climate, and many SMEs simply can’t afford to wait months and months to be paid for work they have carried out.

“As a result, paying late often works to the detriment of big businesses as they shrink the pool of suppliers and contractors who are able or willing to work for them, hampering competition and choice. We have written to Molson Coors urging them to reverse the extension to their terms and sign up to the Prompt Payment Code.”

The Forum previously entered another brewing giant – Carlsberg – into its late payment Hall of Shame after discovering that the Danish firm was taking up to 120 days to pay some suppliers.

The most recent addition to the Hall of Shame was IT multinational Dell after the computer giant extended its terms to 65 days.

Molson Coors finance director David Heede told the Morning Advertiser: "Brewing is a largely domestic industry and has strong links with agriculture, pubs and communities and so playing a huge role in generating local jobs, government revenue and supporting the wider UK economy.

"However, there is a fundamental challenge for the beer industry – the total beer profit pool is down approximately 30% over the last five years.

"As part of a global initiative on working capital, we are changing our Supplier Payment Terms from 1 September to be more consistent with industry standards and to be more competitive in the global beer market.

"Looking ahead to the long term of the beer market is vital to the sustainability of the category and will ultimately benefit our consumers, customers and, of course, our suppliers.”

* Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum is recognised by the Government as one of the six main business support and lobby groups.

Broadcast media – the Forum has ISDN capability and can provide comment, in quality audio, at short notice. The Forum can also provide journalists with localised and sector-specific case studies.

The Forum is a proactive, not-for-profit organisation, providing comprehensive support, protection and reassurance to small businesses.

The organisation aims to deliver an exceptional service to its members, adding value through the provision of practical, tailored solutions that promote business success, and by being their voice in government.

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