Late payment shame of UK supermarkets exposed
All of the UK’s leading supermarkets are guilty of poor payment practices, new research has revealed.
The findings from Creditsafe, a leading commercial credit reference agency, showed all of the major supermarkets regularly fail to pay suppliers on time, with Tesco and Asda exposed as the worst offenders.
In the past six years the two grocery giants have been hit by 149 County Court Judgments (CCJs) after failing to pay invoices on time, out of a total 185 issued against all supermarkets.
While the average value of the 75 Judgments Asda was issued with stands at £2,473, Tesco’s 74 averaged a considerably higher £5,948.
Asda disputed the figures and said that the survey was ‘not an accurate reflection’ of its supplier relations which are ‘open, honest and trustworthy’.
Tesco said: “Over the last year we have worked hard to make Tesco a very different company. Our data shows we are currently paying 99.8% of invoices on time.”
The findings also showed Waitrose pays on average 36 days later than agreed credit terms, whilst Asda pays on average 31 days later than expected and WM Morrison averages 18 days late.
Aldi pays its supplier bills on average 15 days late, with Lidl transferring funds owed 11 days later than agreed.
Sainsbury’s was revealed as the most ethical of the supermarkets, but even they are paying their suppliers on average seven days after the due date.
Rachel Mainwaring, operations director at Creditsafe UK, said: “This analysis reinforces the poor payment practices endemic in British business culture.
“Firms routinely pay invoices late to assist with their own cash management without considering the potentially devastating knock-on effect this can have in the supply chain.”
The news is particularly embarrassing for Tesco, who are already in the spotlight for knowingly delaying payments to their suppliers in order to improve their own financial position. But this isn’t the first time a large organisation has been exposed for enforcing poor payment practices on small companies.
Last year research by the Federation of Small Businesses (FSB) revealed that supply chain bullying has affected almost one in five small businesses.
The government has tried to reduce the problem in recent years by strengthening the prompt payment code and implementing tougher reporting laws, but it seems the supermarkets are doing little to address the problem.
Mike Cherry, Policy Director for the FSB, said: “For too long, larger firms have been free to abuse their relationship with smaller suppliers. Tesco has since apologised, and improved its terms. We need to see more company boards taking responsibility for their payment terms, and choosing to back their small suppliers.
“We need to see wholesale culture change, which can only come about through a full public inquiry which examines how to strengthen the prompt payment code.”
Have you experienced similar poor payment practices from larger companies? What do you think should be done to curb the problem? Please share your views in the comments below.
NOTE: The analysis of late payment performance relates only to Creditsafe customers’ payment interactions with the supermarkets named.