Call for policing of late-paying retailers

Industry bodies are calling for the stricter policing of food retailers, after new data from Experian revealed that retailers paid suppliers an average of 26 days beyond agreed payment terms in September 2009.

Late payments are “without a doubt” causing food and drink companies to close, said Phil McCabe, spokesman for the Forum of Private Business. “Retailers are abusing their power,” he added. “Often suppliers don’t protest loud enough because they fear that they could be delisted the next day.

"Our research shows that over 50% of businesses say that late payments are their biggest concern.”

Over the year, UK food retailers increased the time it took to pay suppliers by three days, up from 23 days beyond agreed payment terms in September 2008 to 26 days in September 2009, according to Experian.

This contradicts the general UK trend, said Experian as in September 2009, it saw the biggest month-on-month improvement in late payments since the beginning of the recession. And, in contrast to the food industry, its figures showed that UK businesses were typically paying bills one day earlier during September 2009 compared with the same month in 2008 - from 23 days to 22 days beyond agreed payment terms.

A Food and Drink (FDF) spokeswoman said that the industry should benefit from The Grocery Supply Code of Practice, due to come into force in February 2010, which states that retailers must pay their suppliers within a ‘reasonable’ period of time after receiving a supplier’s invoice.

She said: “The FDF fully supports the Code of Practice, which aims to set a clear framework to allow commercial relationships in the supply chain to operate fairly.

"However, there is a need to make sure that the new code operates effectively and allows any improper use of market power to be identified and dealt with. For this reason, the FDF would like to see an ombudsman in place to ensure the provisions of the Code are strictly adhered to.”