Monday, 20 September 2010

Cheeky Devils

Carling brewer Molson Coors has decided not to process supplier invoices until 90 days after receipt. The Forum of Private Business today included the brewer in its "Hall of Shame" for the move, which took effect this month. FPB spokesman Phil McCabe said many small businesses couldn’t afford to wait so long in order to be paid. Molson Coors finance director David Heede said: "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.

So there you have it. "We as brewers are suffering, so you as a supplier have to wait over three months for your payments". The article doesn't say if MolsonCoors would be just as happy to wait three months for money owed to them, or, how they'd feel if told by someone ordering a pint of Carling, "I'll pay you in 90 days".

Would they think it such a great idea then I wonder?

The Morning Advertiser and the Publican both have the story.


Cooking Lager said...

Tesco standard payment terms to suppliers is I believe 60 days.

Though as a customer you can get 13 months with their 0% purchases clubcard credit card on your own cheap lout, Tandy.

Tandleman said...

If it's that cheap, I wouldn't need 13 months to pay would I Cookie?

Sid Boggle said...

I expect they think they've got their suppliers by the short and curlies, so they won't tell them to sod off.

Dunno where they get their stuff, but I hope it doesn't send anybody to the wall and prevent smaller brewers from getting ingredients.

Or maybe suppliers can put Molson Coors to the back of their customer pile? You know... "you want it when? We can deliver in 90 days..." that sort of thing

Mark, said...

In the advertising world agencies are been squeezed to pay for services up front or receive ad hoc credit of 7 or 14 days.

The larger the agency the more they might be able to negotiate, but after agencies folding left right and centre in the last year media providers wanted protection from lost revenue.

I wonder if the same applies when the grain suppliers are bigger than the breweries, assuming Molson Coors are so big a client they are exempt, and in fact can do the opposite?

Barm said...

Mark, it's all about who has more weight to throw about. Molson Coors think their suppliers have no choice but to accept the new terms. Perhaps they are right.

Similarly, Molson Coors tried to raise the wholesale price of Carling a few months back and Tesco told them more or less politely to stick their price rise where the sun don't shine. It's all down to who has more weight to throw about.

Last I heard margins were very slim indeed in the cooking lager trade. There will be more of this kind of manouevring.

RedNev said...

I thought there was a law about payment periods.

As for cooking lager, I'd expect them to pay me to drink it. And up front - not in 90 days. And even then I'd probably gag ...

Oblivious said...

Nasty business practices

"Last I heard margins were very slim indeed in the cooking lager trade. There will be more of this kind of manouevring."

Cutting the marketing budget will increase their margin!

Barm said...

It will also lead to the complete collapse of the brand, so is not an option.

HardKnott Dave said...

It's quite usual to have poor payment from larger customers. We have just received a payment from a managed pub 3 months after delivery. Many small pubs pay us cash on delivery.

It's a case of working out the costs of late payment in terms of cash flow and bank charges - they pay up in the end.

But, needless to say, if all my incoming revenue was 3 months behind supply it would be very tough indeed. I suspect some suppliers to Molson Coors will have to reconsider trading with them.