Supermarket chain Sainsbury’s has today been criticised over its move to more than double payment times to all of its non-food suppliers.
Last month, the grocer wrote to its non-food suppliers explaining that payment times have now increased from 30 to 75 days, claiming that the change would allow it to align itself with standard industry practice.
As a result of this letter, the Forum of Private Business has (FPB) has written to inform the chain that it is being added to its Hall of Shame and called on it to sign the Government’s Prompt Payment Code and pledge to pay suppliers on time without changing terms & conditions once a contract has been agreed.
The FPB’s Policy Adviser Robert Downes attacked Sainsbury’s’ decision as being unethical, commenting: “Sainsbury’s might like to promote themselves 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.
“With startling arrogance they have then tried to justify this increase by claiming 75 days is the industry standard. This is utter fabrication.”
Rival grocer Tesco has signed the pledge already and doing so allows small firms, which are owed around £37 billion in unpaid invoices at any one time according to research carried out by Bacs, to safeguard themselves against financial damage.
Sainsbury’s, which earlier this month announced a total sales rise of 4.1 per cent over its first half, is the latest in a long list of companies to be criticised by the Forum, with Dell, Argos and Carlsberg having been added to the list in the past for changing supplier payment times.
Downes explained that such changes leave small businesses with little choice but to accept due to fear of losing business which is not an option given the economic climate and called on the Government to do more in stamping out the issue.
“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,” Downes said.
“We are hoping the Groceries Code Adjudicator, when it does eventually comes into being, will maybe deter supermarkets from acting like this certainly for food suppliers, behaviour which we think is likely contrary to the Grocery Supply Code of Practice.
“In the meantime we will continue to give small firms a voice by holding slow-paying firms to account publicly in our late payment Hall of Shame.” In response to the criticism, a Sainsbury’s spokesperson said: “We have written to our General Merchandise suppliers about our intention to bring their payment terms more in line with the rest of the industry.
“This will be followed up individually with any suppliers experiencing difficulties in meeting this change. We are fully committed to ensure all payments to our suppliers are made on time.”