Sainsbury’s shamed for increasing supplier payment terms

Supermarket giant Sainsbury's has been named and shamed by the Forum of Private Business for having increased all non-food supplier payment times from 30 to 75 days.

The supermarket told those affected last month in a letter it was set to make the dramatic increase following a ‘review’ which found their standard 30-day payment times ‘differed’ from industry standards.

The company joins the likes of Dell, Argos, and Carlsberg, which have all previously increased supplier payment times retrospectively, in the FPB late payer hall of shame.

The Forum has written to inform Sainsbury’s – which earlier this year announced a 7 per cent increase in profits – to inform bosses there it is being added to the hall of shame, and to ask it to sign the government’s Prompt Payment Code, subscribers to which pledge to pay suppliers on time, and not to change terms and conditions mid-way through a contract.

Forum policy adviser Robert Downes says, ‘Sainsbury’s might like to promote itself as the ethical supermarket, but when it comes to their treatment of suppliers they are anything but.

‘No right-thinking person could justify what Sainsbury’s is proposing – a 150 per cent increase in the time it takes them to pay a supplier for goods provided – as being fair and decent.’

Research carried out by Bacs has shown around £37 billion is owed to small companies in unpaid invoices in the UK at any one time, with slow payment a major headache for the supply chain.

Signing up to the Prompt Payment Code – like Tesco has done – helps safeguard firms and promotes best practice, the Forum says.

Adds Downes, ‘When suppliers receive a letter like the one Sainsbury’s sent out, few have any choice but to agree to the new payment terms. There is little room for bargaining through fear they will lose the business, and no small firm in the current economic climate wants that.

‘For the sake of small businesses and the economy, the government must prioritise tackling the culture of poor payment, addressing the bully boy behaviour of these bigger companies.’

A spokesman for Sainsbury’s says that the change aims to ensure all non-food suppliers quote on the same 75-day terms.

He adds, ‘Many of our non-food suppliers are already contracted on this basis, although some others were historically on a 45-day payment term. Most of our competitors have 90-120-day payment terms.’

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