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Sainsbury’s enters Hall of Shame after extending payment times by 150%

Sainsbury’s enters Hall of Shame after extending payment times by 150%

Supermarket giant Sainsbury’s has been named and shamed by the Forum of Private Business for having increased all non-food supplier payment times from 30 to 75 days.

The supermarket told those affected last month in a letter it was set to make the dramatic increase following a ‘review’ which found their standard 30-day payment times ‘differed’ from industry standards. The move has, however, seen the Forum enter the grocer in to its Hall of Shame to join the likes of Dell, Argos, and Carlsberg, that have all previously increased supplier payment times retrospectively.

The Forum has written to inform Sainsbury’s – which earlier this year announced a 7% increase in profits – to inform bosses there it is being added to the Hall of Shame, and to ask it to sign the Government’s Prompt Payment Code, subscribers to which pledge to pay suppliers on time, and not to change terms and conditions mid-way through a contract.

“Sainsbury’s might like to promote itself as the ethical supermarket, but when it comes to its treatment of suppliers it is anything but,” said the Forum’s Policy Adviser, Robert Downes. “No right thinking person could justify what Sainsbury’s is proposing – a 150% increase in the time it takes them to pay a supplier for goods provided – as being fair and decent. With startling arrogance they have then tried to justify this increase by claiming 75 days is the industry standard. This is utter fabrication.

“This kind of borrowing from suppliers – whatever their size – is scandalous, particularly from a profitable FTSE 100 company like Sainsbury’s, who are in no way financially challenged, but clearly just greedy.”

Research carried out by Bacs has shown around £37 billion is owed to small firms in unpaid invoices in the UK at any one time, with slow payment a major headache for the supply chain. Signing up to the Prompt Payment Code – like Tesco has done – helps safeguard firms and promotes best practice, the Forum says.

Added Downes: “When suppliers receive a letter like the one Sainsbury’s sent out, few have any choice but to agree to the new payment terms. There is little room for bargaining through fear they will lose the business, and no small firm in the current economic climate wants that. For the sake of small businesses and the economy, the Government must prioritise tackling the culture of poor payment, addressing the bully boy behaviour of these bigger companies.

“We are hoping the Groceries Code Adjudicator, when it does eventually comes into being, will maybe deter supermarkets from acting like this certainly for food suppliers, behaviour which we think is likely contrary to the Grocery Supply Code of Practice. In the meantime we will continue to give small firms a voice by holding slow-paying firms to account publicly in our late payment Hall of Shame.”

Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum of Private Business is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses.

For more information, visit www.fpb.org or call 0845 130 1722.

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