U.K. drug giant GlaxoSmithKline ($GSK) has stretched its payment schedule for contractors from 60 days to as much as 95, The Daily Telegraph reports, a move that has CROs and suppliers accusing the company of corporate greed.
The Forum of Private Business, a U.K. employers' group, has placed GSK in its "hall of shame," according to the newspaper, saying its invoice payment policies show "scant regard" for smaller suppliers without the margins or scale to wait that long for funds.
"This kind of borrowing from suppliers--whatever their size--is scandalous," one anonymous GSK contractor told the Telegraph.
For its part, Glaxo says extending the timeline for payment would have little to no impact on suppliers that submit invoices in a timely fashion, and a spokesman told the newspaper that its policies are consistent with other major corporations.
Even the 60-day window is a recent expansion of the company's previous policy, the Forum says, and GSK is using its leverage as the fourth-largest drugmaker in the world to put the squeeze on its contractors, spokesman Robert Downes said in a statement.
"When suppliers receive a letter like the one GSK's suppliers are starting to receive, few have any choice but to agree to the new payment terms," Downes said. "There is little room for bargaining through fear they will lose the business, and no small firm wants that in the current economic climate."
The Forum has appealed to the U.K. government with mild success, the Telegraph notes, as Business Minister Michael Fallon has written to CEOs of the country's largest 350 companies asking them to sign a Prompt Payment Code that would expedite timelines for suppliers.
- read the Telegraph story
- check out the Forum of Private Business' statement