19 August 2010 | Lindsay Clark
Leading UK retailer Marks & Spencer (M&S) has announced it is extending payment terms for around 860 suppliers.
The company said it was moving full services suppliers from a four-week payment cycle to five weeks. Meanwhile, freight-on-board suppliers, where the buyer pays for shipping once goods leave the supplier’s premises, will have payment terms extended from 30 to 60 days. The new terms apply to suppliers of general merchandise, which excludes food goods.
The company said in a statement: “Following a full audit of our general merchandise payment terms, we are extending these terms to bring us in line with industry standards, and aligning them so that we can have greater parity across our supply base.”
The changes will be applied to new orders raised with vendors on or after 1 September 2010 and to existing orders from full services vendors, which take responsibility for storage and transport, on or after 1 December 2010.
Although suppliers may struggle with cash flow when the extended payment terms come in, M&S said it is also broadening its finance scheme to include all general merchandise providers. The financing, offered in conjunction with RBS and HSBC banks, enables suppliers who sign up to receive payment from the banks as soon as their invoices have been approved by M&S, which is normally around seven days from receipt.
“We are extending our current vendor financing scheme, which offers our suppliers the ability to improve their cash flow,” the company said.