Asda is set to reduce the payment terms to 14 days for over 1000 small suppliers as it aims to improve relationships with its supply base.
In March, it was reported that suppliers were told the waiting time for payments would rise to 90 days, up 50 per cent from its previous 60-day waiting time.
Following in the footsteps of its larger rivals, the grocer is now attempting to increase support for its supply base and establish an effective working relationship. This move will help 1200 small suppliers worth £250,000 to Asda, 430 of which have switched to the new arrangement today.
Meanwhile, the retailer has already implemented simplified terms and conditions for its supply chain, offers early payment finance options, and runs its Sustain and Save programme which helps businesses work more efficiently.
Despite 11 consecutive quarters of decline for the UK‘s fourth largest supermarket, Asda showed some positive growth of 0.9 per cent in the 12 weeks to May 21.
It is hoped this move would further bolster its turnaround efforts.
“Our relationship with our suppliers is vital to ensuring we can do the best job for our customers and we continue to focus on building strong partnerships with them, many of whom have been with us for decades,” an Asda spokeswoman said.
“We‘re always looking at ways we can work more effectively together and we believe it is the right thing to do to reduce our payment terms to fourteen days for our smaller suppliers.”