Concern over late payments to small suppliers

News Article - 23 May 2012
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Concern has been expressed over the reluctance of major retailers to pay small suppliers, after research found that many were continuing to pay late.

Analysis of 4,500 invoices submitted to UK retailers under £5,000 for the first six months of 2006 by industry publication Accountancy Age revealed the continuing late payment trend.

Tesco's payment had deteriorated, with the company paying "dramatically fewer" small invoices to suppliers on time compared to last year.

It managed to pay 87 per cent of its invoices below the value of £5,000 within the agreed time in 2005, but only achieved 67 per cent this year.

The records of Somerfield and Morrisons also deteriorated in 2006, the study found.

A Tesco spokeswoman told Accountancy Age that the company was "very surprised" at the findings.

"Our suppliers tell us they are happy with our record on payment. In our 2006 Viewpoint survey, 95 per cent of invoices paid within terms of our suppliers said that Tesco was reliable at paying them on time," she said.

Kevin Pearce, head of food chain and farm policy for the NFU, said that 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," he added.

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