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GSK Shifts Supplier Invoice Payment Timing, Business Forum Cries Foul

By Zachary Brennan , 23-Jan-2013

GlaxoSmithKline has decided to only make once-monthly payments to suppliers, which could increase the amount of time it takes a CRO, CMO or other supplier to be paid for its work.

Previously, GSK paid its suppliers’ invoices 60 days after they were received, no matter the time of the month. But now the payments will come at the beginning of each month, after 60 days have elapsed since the company received the invoice. 

The UK’s Forum of Private Business (FPB) condemned the shift in payments and said many smaller suppliers will have no choice but to comply with the new terms.

While big firms like GSK with large cash reserves are shielded to some extent from slow payment, small firms can be decimated if they can’t manage their cash flow,” Robert Downes of the FPB told Outsourcing-pharma.com.  

What makes the GSK case all the worse is the sheer size and profitability of the firm – the fourth biggest pharmaceutical company on the planet,” Downes added. "It is, however, a company concerned only with boosting its own profits whatever the cost to smaller firms, and has scant regard for the consequences of its actions.”

But GSK told Outsourcing-pharma.com that the changes will have little to no impact on suppliers if they “submit their invoices towards the end of the month.”

We greatly value the relationships with have with our many suppliers and understand the pressures on cashflow and financing being faced by smaller companies at this time.  This is why, for smaller companies, we have a number of schemes in place to help them, including alternative payment schedules and offering supply chain finance,” GSK added.

The company in 2009 also signed on to the UK’s Prompt Payment Code, though the code calls on companies to pay suppliers without attempting to change payment terms retrospectively.

Downes noted that GSK is still in the process of informing all of its suppliers about the changes in the payment schedule.

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