Small businesses have reacted with dismay at the news that Carlsberg will now take at least three months to settle supplier invoices.
The Forum of Private Business (FPB) has entered the brewer into its Hall of Shame for a record third time after it gave suppliers 14 days to adjust to the new payment terms. The so-called C93 terms (end of month + 93 days) are a clear breach of European guidelines.
Carlsberg sidestepped the EU issue in a letter to the FPB stating “parties are free under English law to agree payment terms longer than 60 days”.
Ian Cass, Managing Director at the Forum of Private Business, commented: “The letter adds insult to injury. If business is to take the Small Business Commissioner seriously then they will need to respond in a manner that will make [Carlsberg] take notice. The company’s key suppliers seem to be financial institutions and not the people who help them make and distribute their lager.”
Tracy Ewen, Managing Director of IGF Invoice Finance, said the news was a sign of a “significant imbalance of power” between large companies and their suppliers, who were powerless to act. She hinted at businesses being forced to shut unless the government stepped in.
“If nothing changes, we may see small companies fold unnecessarily as a result of unfair payments, and the macroeconomic impact of these small businesses closing down could have damaging repercussions for the economy as a whole. It is imperative that European regulations are adhered to, for small businesses to prosper in the UK economy,” Ewen concluded.
Carlsberg was already in the FPB’s Hall of Shame for extending payment terms for some suppliers to 95 days in 2008.