☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
16 April 2013 | Adam Leach
Department store Selfridges has been criticised for asking its suppliers for a 3 per cent discount for settling invoices within its previous standard payment terms of 60 days.
The retailer, which has been operating in London since 1909, wrote to suppliers in October saying it expected incremental discounts on invoices in return for it paying more promptly. For paying within 60 days - which used to be the standard terms before these were increased to 75 days – the retailer demanded 3 per cent off. Vendors were expected to cut 4 per cent for 30-day payment, and the store expects a 5 per cent discount to settle bills within 21 days.
In a statement, Selfridges explained it was bringing its terms in line with the retail sector. “In October last year, Selfridges began to align the conditions of the payment of all its suppliers in line with current industry standards,” it said.
But the Forum of Private Business (FPB), which is campaigning against companies that are failing to meet, or extending their terms to the detriment of suppliers, described the action as “slippery”. Robert Downes, policy advisor at the small business group, said: “This isn’t the first instance we’ve heard of where a big retailer has asked for an invoice haircut in return for quicker payment, but having first increased their own standard payment times. It’s a slippery way of doing business.”
Selfridges is the latest retailer to come under fire over changes made to payment terms. Last month, Laura Ashley, requested an immediate discount of 10 per cent from its suppliers to help it stay “competitive”. In February, Monsoon informed suppliers they would be subject to a mandatory discount of 4 per cent. And last year, Sainsbury's extended its payment terms without negotiating with suppliers.