Failed Sainsbury’s/Asda merger to delay supplier payments

By James Ridler contact

- Last updated on GMT

Supplier payments could be further delayed by the failed Sainsbury's/Asda merger
Supplier payments could be further delayed by the failed Sainsbury's/Asda merger
Suppliers may be forced to wait even longer for payments from supermarkets in the wake of the Competition and Markets Authority’s rejection of the proposed Sainsbury’s/Asda merger, as delays continue to rise.

Some suppliers now fear the two retailers will look to save on costs by paying their bills even later, claimed Conrad Ford, chief executive of business finance comparison business Funding Options.

Ford’s warnings came as UK supermarkets continued to increase the amount of time taken to pay their suppliers – 40 days, up from 38 reported by Companies House in the previous year. This was up 18% since 2013, when it stood at 34 days.

Government initiatives

The increased delay was despite initiatives from the Government to reduce the amount of time big businesses took to pay their suppliers, such as the Prompt Payment Code. However, this was not actively enforced, leaving the task to the Groceries Code Adjudicator to ensure the retailers it regulated treated their suppliers fairly.

“Supermarkets have long been accused of taking advantage of suppliers. The Government’s calls for big business to improve their payment practices seem to have largely fallen on deaf ears,”​ said Ford.

With supermarkets seemingly unwilling to regulate payment to their suppliers, the task falls on those suppliers to be prepared for delays.

Plan for late pay

“It’s important that food manufacturers and small businesses in general plan for a late-paid invoice. They need to know where they are going to get finance to cover those cashflow issues,”​ Ford added.

“We see a lot of suppliers to supermarkets coming to us looking for business finance that can help cover those tricky periods, some of which are caused by their clients not paying on time.”

Meanwhile, in March, The Co-op Group has had to overhaul its processes and face costs of £1.3m after Groceries Code Adjudicator Christine Tacon announced it had breached the Groceries Supply Code of Practice.

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