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Supermarket price wars mean suppliers waiting longer to be paid

Consolidation in the sector could make the situation even worse.

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Supermarket price wars mean suppliers waiting longer to be paid

Research by Funding Options, the online business finance supermarket, said supermarkets were delaying payments as a result of price wars ‘effectively demanding loans from their suppliers interest free’.

 

Funding Options said delays were worsening despite the Prompt Payment Code, which theoretically set a 30-day target for businesses to pay their suppliers.

 

Many of the UK’s largest supermarkets are signed up to the code, including Tesco, Asda and Sainsbury’s.

 

Funding Options added payment delays could worsen as supermarkets increase their power over suppliers, with the prospect of a Sainsbury’s and Asda merger and Tesco’s recently completed takeover of wholesaler Booker.


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Conrad Ford, chief executive at Funding Options said: “Food producers are suffering from longer waits for payment as the supermarkets wage a price war amongst each other.”

 

Delays

 

“Supermarkets may be able to delay payments even longer as they consolidate their sector further.”

 

He added the mergers and acquisitions would worry producers ‘who rely on healthy competition between retailers to win more sensible contract terms’

 

“Food producers are at risk of losing any negotiating power they had left.”

 

“Even with Government initiatives such as the Prompt Payment Code, we are increasingly seeing food producers suffering from cashflow issues as a result of latepayments.”

 

He added it was vital food producers reviewed all options to minimise the impact even just a few late payments could have.

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