“Morally bankrupt” GlaxoSmithKline extends payment times by 50%

Posted on 18 Jan 2013

Drugs manufacturer GlaxoSmithKline has been described as "morally bankrupt" after increasing supplier payment times to as much as 95 days.

The Forum of Private Business has put the pharmaceutical firm in its Hall of Shame, which lists big companies increasing the length of time they take to pay suppliers.

GlaxoSmithKline is in the middle of informing its suppliers of the retrospective changes, upping payment terms from 60 days to as much as 95 depending on the date invoices are received.

GlaxoSmithKline joins Sainsbury’s, Dell, Argos and Carlsberg in the Hall of Shame, with a spokesman for the Private Business Forum saying that “the Government must prioritise tackling the culture of poor payment, addressing the bully boy behaviour of these bigger companies.”

“When suppliers receive a letter like the one GlaxoSmithKline’s suppliers are starting to receive, few have any choice but to agree to the new payment terms,” he added.

GlaxoSmithKline has tripled how long it takes to pay suppliers in just two years, after suppliers were forced into waiting an additional 30 days to be paid just two years ago.

A spokesman for the Private Business Forum described GlaxoSmithKline as “morally bankrupt.”

“Prompt payment can make all the difference for struggling small firms,” he added.

Business Minister Michael Fallon has warned big businesses that they will be publicly named if they fail to sign up to the Prompt Payment Code, a voluntary agreement to promote good payment practices.

The Business Minister has written to all FTSE 100 and FTSE 250 companies urging them to sign up to the Code, which will be four years old in December, but he has so far failed to publicise names in the New Year as promised.

“Too many of our biggest companies are ignoring the Prompt Payment Code,” said Mr Fallon.

“Late payment causes real cash flow problems for entrepreneurs. It stops them from growing their business – we need to change the culture,” added Fallon.

Fifty-nine manufacturers on the FTSE 100 and FTSE 250 have signed up to the code, which states that companies won’t change lengthen payment terms after a contract has been signed.