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Morrisons under fire for late supplier payments

By Mike Stones , 08-Feb-2013

Supermarket giant Morrisons is under fire from its suppliers for the late payment of invoices, which, they say, the retailer is blaming on a faulty computer system, FoodManufacture.co.uk can exclusively reveal.

Morrisons has been accused by its suppliers of late payments due to ‘a computer glitch’

Morrisons has been accused by its suppliers of late payments due to ‘a computer glitch’

A number of food manufacturers contacted us to complain of significant delays in the payment of invoices. Morrisons had blamed the late payments on the difficulties caused by its computer system, they said.

The boss of one leading supplier, who asked not to be named, told us: “This was brought to my attention last week and I thought it was odd. We should receive payment after 30 days but we have now been waiting 45 days. They blamed it all on computer problems – telling us the delay was due  to a computer glitch.”

The source added: “From a working capital point of view, it is not very good news at all.”

Another supplier remarked that it was only eight months since the retailer had demanded price discounts of “half a million pounds”.

A supplier told us his firm was asked to accept a price discount in return for distribution increases well before the summer discount meetings. “We still have not seen the increased distribution – nearly 12 months later,” he said.

Ken Morrison

A number of suppliers commented on what they described as Morrisons’ “different attitude” towards suppliers over the past year or so. They praised the company under the management of founder Ken Morrison but complained the present management team appeared to have “lost focus.”

“We’ve found that of the major four multiples, they [Morrisons] are the most unreliable,” said a supplier. “It feels as though they have been left behind. It doesn’t seem a very coherent approach to business. Neither does it seem a very happy ship in Bradford [Morrisons’ head office].”

In July 2012, FoodManufacture.co.uk exclusively revealed Morrisons had summoned leading suppliers to a meeting on June 18, where it revealed plans to source greater volumes from fewer suppliers, to increase efficiency.

Suppliers said the supermarket was looking for discounts of “half a million pounds” from each of its remaining suppliers under the new arrangements.

Speaking at the time, one unnamed supplier told us: “They are trying to keep the City happy. They want a quick improvement in their graphs for the quarter, but I can't see anything behind that. Strategy just seems to be all over the place. It's confusing.”

A Morrisons spokesman admitted: "We have experienced a temporary issue with our new computer system. But all payments should now be going through to our suppliers."

If you have suffered from late payments, from whatever source, please contact the author in confidence at michael.stones@wrbm.com .

Late payment index

Meanwhile, earlier this week, the 2012 Late Payment Index – produced by information services firm Experian – revealed that UK businesses paid their bills more than a day earlier in 2012, compared with the previous year. 

Last year firms paid their overdue invoices on average 24.66 days after agreed terms, compared with an average of 25.70 days during 2011.  

Gareth Rumsey, research director at Experian’s business information services, told us: “It is an encouraging picture for food manufacturing. The industry’s payment performance showed an improvement from 26.09 days beyond terms in 2011 to 23.15 days in 2012.

“This improvement now puts the food manufacturing sector nearly a day and a half faster than the national average of 24.66 days.”

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