Small suppliers hit by retailers’ ‘shocking’ late payment record

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Retailers are continuing to fail to pay small suppliers on time,
Accountancy Age can today reveal.

Despite widespread criticism of retailers treating their small suppliers with
disdain, analysis of 4,500 invoices submitted to UK retailers under £5,000 for
the first six months of 2006 show that retailers are continuing to pay late.

The National Farmers’ Union (NFU) branded the results ‘shocking’ this week,
as retailers sought to defend themselves against the charges.

The research carried out by Accountancy Age, in conjunction with
credit specialists Graydon, showed that Tesco had paid dramatically fewer small
invoices to suppliers on time compared to last year.

Last year the UK’s biggest retailer paid 87% of its invoices below the value
of £5,000 within terms, falling to 67% this year.

Along with Tesco, Somerfield and Morrisons both paid suppliers later in 2006
than last year.

Tesco professed surprise at the findings: ‘We are very surprised at these
findings, as our suppliers tell us they are happy with our record on payment. In
our 2006 Viewpoint survey – which is the largest anonymous supplier survey of
its kind – 95% of invoices paid within terms of our suppliers said that Tesco
was reliable at paying them on time,’ a spokeswoman said.

Morrisons said that the well publicised problems with its IT systems last
year had led to some delays in payment. ‘During the integration of the Safeway
and Morrisons systems, there were inevitably some small delays,’ said in a

Somerfield paid 42% of invoices under £5,000 within terms. Somerfield are now
paying 7% fewer invoices within terms compared to last year. The figure for
Boots was 46%, a slight improvement on last year when 41% were paid on time.

Kevin Pearce, head of food chain and farm policy for the NFU, said: ‘In the
current climate of rising costs suppliers need to be able to rely on the payment
terms that have been agreed in order that their cash flow can be maintained.
These statistics are shocking and further demonstrate our view that there is a
serious imbalance of power in the supply chain, with some of the retailers
treating their suppliers appallingly.’

Marks & Spencer, which has seen a turnaround in its overall fortunes, was
the great success story of the figures (64%), increasing substantially the
invoices paid on time.

The Federation of Small Business said small suppliers were often ‘bullied’
into not chasing payment.

‘If a big client moves the goalposts, you’re in a very tough situation,’ said
an FSB spokesman.


% of invoices paid within terms:

Tesco: 67%
Boots: 46%

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