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Brewer entered into late payment hall of shame

International brewing firm Molson Coors has been entered into the Forum of Private Business ‘Hall of Shame’ for its supplier payment practices.

The company, which manufactures brands Carling, Grolsch and Cobra, wrote to suppliers in September to warn them that it may take over three months from receipt to pay them.

The move, which may leave Molson Coors’s suppliers waiting for more than a quarter before receiving any payment, was blamed on the need to be "more consistent with the industry standard".

The change in payment terms came to light after a supplier of the brewer wrote to the Forum of Private Business - a not-for-profit support organisation for smaller firms - about the issue.

Arguing that the payment practice will simply ‘squeeze’ smaller companies 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.

Until the decision is reversed Molson Coors will remain in the Forum’s '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 are very disappointed that yet another big business has seen fit to profit at the expense of its struggling small suppliers.

Mr McCabe added: "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”.

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.

Late Payment Legislation

Commercial litigation lawyer, Christopher Burke, of Manchester commercial law firm Pearson Hinchliffe , commented: “Despite the credit crunch it is unfortunate that some larger firms are exercising their commercial muscle by extending their payment terms. The difficulty for smaller suppliers if they don’t accept the terms set down by their customers is they may be committing commercial suicide – they are dammed if they do and damned if they don’t.

Mr Burke added: “From a legal point of view it is important that terms of business are negotiated and agreed before entering into a contract. Should a company default then there is legislation designed to protect the supplier/creditor against slow or late payers and compensate them via interest and administration fees. This is an underused mechanism as many suppliers are simply so relieved when they are paid that they forgo their right to claim interest on late payments.”

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