WPP's data investment management (DIM) arm Kantar has been accused of holding back payments to suppliers, in a bid to artificially boost its balance sheet in the fourth quarter.
A report in London free paper City AM claimed that hundreds of the firm's staff at UK-based advertising, marcoms, media and brand equity research specialist Millward Brown were instructed by e-mail to delay paying outstanding invoices until the New Year. The e-mail stated that as cash balances are one of the most important indicators of the health of a business, WPP looks at ways to maximise its cash position reported in the year-end accounts. To do this, the firm reportedly informed staff of a 'reduced supplier payment run' in December, limiting payment of invoices to those greater than 90 days old; to those on short payment terms, such as freelance workers; and to those offering a rebate for prompt payment. In addition, the firm asked staff to help with chasing cash owed to WPP and 'slowing down payments to our creditors'.
WPP is a member of the government's Prompt Payment Code, which requires that fair and reasonable payment terms are agreed with suppliers, and that suppliers' invoices are approved and paid within those agreed terms. In a statement, the group said: 'WPP policy, which applies to all subsidiary companies, is to pay vendors in line with contractual obligations and any extended terms agreed with suppliers'.
The news follows a 2.9% decline in WPP's third quarter like-for-like revenue, during a period CEO Sir Martin Sorrell admitted had been a 'tough quarter'. The group predicted a 'broadly flat' 2017, while in August, WPP slashed its full-year growth forecast for revenues and net sales to between zero and 1%, citing cuts in clients' marketing budgets.
Web site: www.kantar.com .
Editor's note: Good Lord, a big company putting off supplier payments till after Christmas? Who'd ever have thought...?
All articles 2006-18 written and edited by Mel Crowther and/or Nick Thomas.