2 Sisters Food Group slammed for supplier letter

By Rod Addy

- Last updated on GMT

2 Sisters claimed the supplier letter was only intended as a starting point for negotiations
2 Sisters claimed the supplier letter was only intended as a starting point for negotiations

Related tags Small business Money Business

2 Sisters Food Group faces criticism from the Federation of Small Businesses (FSB) after BBC’s Newsnight programme revealed a letter to suppliers claiming they could wait over four months for payments.

The programme, which aired on BBC2 last night​ (December 16), cited the letter as claiming a “prompt settlement discount”​ of up to 3% would apply if 2 Sisters paid within this time frame.

If suppliers rejected this, a default period of up to 120 days would apply, or, in special cases, up to 134 days, according to the letter.

The EU Late Payment Directive stipulates a firm should take no more than 60 days to settle bills.

“The main argument 2 Sisters makes … appears to be that these unfair payment terms are only a negotiating position,” ​said the FSB in a statement.

‘Poor defence’

“This is a poor defence at best, and misses the point that small firms do not have the power or resources to reject such unfair terms, nor to get recompense when terms are breached.

“This is why we are calling for the Prompt Payment Code to be strengthened. All firms should be on a fairer footing when negotiating payment terms, and it’s vital we outlaw unreasonable terms and conditions being imposed on suppliers.”

The Prompt Payment Code is administered by the Institute of Credit Management on behalf of the Department for Business Innovation & Skills. It is designed to promote best practice, paying suppliers on time and clear supplier guidance. Firms are encouraged to sign up to the code on a voluntary basis.

The FSB also highlighted its support for the Small Business, Enterprise and Employment Bill 2014-15, which had its second reading in the House of Lords on December 2 and was “a golden opportunity”​ to tackle late payments and other supplier abuses, it said.

‘Working tirelessly’

An FSB spokesman told FoodManufacture.co.uk: “Late payment is a really significant issue and something we are working tirelessly on. The Small Businesses Bill is one key element of that.”

2 Sisters said the letter was intended to be the starting point for a negotiation and claimed it took an average of 49 days to pay suppliers last year.

In a statement quoted by Newsnight​, 2 Sisters said: “Ultimately, the supplier can choose not to trade on any terms it feels is unsuitable, and we abide by standard business-to-business payment protocols where payment can exceed 60 calendar days as long as this is expressly agreed in the contract.”

If you are a 2 Sisters supplier and wish to provide positive or negative comments regarding its trading relationship with you, please contact zvpunry.fgbarf@jeoz.pbz​.  

  • Premier Foods boss Gavin Darby has admitted the company made mistakes after it was criticised for demanding investments from suppliers​ to secure future contracts with it.

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3 comments

However..........

Posted by Murray Sellars - Lindum Packaging,

The worst aspect of this is that it adds to the mistrust between food manufacturers and their suppliers. Very real savings could be enjoyed by the manufacturers if they would only embrace their suppliers as partners and not adopt some of these restrictive practises.

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as bad as the rest...

Posted by DS,

2SFG also adopt a "pay to trade" policy - you have to pay for the "privilege" of being a preferred supplier of theirs, and also face low margins in working with them anyway.

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Shocking

Posted by Chris,

This is far worse and more insidious than the Premier Foods 'scandal'. In that case, the suppliers could amortise the payment back into the cost of the goods and benefit from the exclusivity it gave. In this case, 2SFG are deliberately crippling suppliers cash flow in order to bolster their own (and then claiming a discount, should their cash flow be OK in any given timeframe!!)

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