Luxury department store Selfridges has been accused of unfair business practices against its suppliers after calling for three per cent of the value of their invoices to be paid as a settlement discount in return for bills to be paid within 60 days, it has been reported.
Changes to payment terms, which had previously allowed payment within 75 days, will affect both new orders and outstanding orders which had been made under previously agreed terms, a source told The Telegraph, and the Forum for Private Business (FPB) has criticised the retailer for its “unfair” demands.
A spokesperson for the FPB told the paper: “While we understand the pressures being faced by high street retailers, it seems neither fair nor right that they are asking suppliers to take a big hit in this way, especially without any meaningful discussion beforehand.
“While some suppliers may be in a position to agree the deal, others won’t, and then it’s a stark choice of waiting longer for their cash, or getting it quicker but losing a sizeable chunk.
“It really is a case of putting them between a rock and a hard place.”
Demanding sudden changes to terms with suppliers is on the increase among high street retailers, with Lafurniture & fashion retailer Laura Ashley recently writing to suppliers to demand a cost price reduction, forcing the latter to operate at a loss.
Department stores John Lewis and Debenhams were also named and shamed by the FPB last month while fashion retail group Monsoon Accessorize was criticised for increasing supplier payment times, breaking a prior agreement.
A Selfridges spokesperson responded to the criticism, explaining that changes had been implemented six months ago in order to “align the conditions of the payment of all its suppliers in line with current industry standards”.