Supermarkets ‘exemplars’ for paying suppliers on time

Just 12% of suppliers to UK supermarkets reported late payments in 2020, compared to 35% in 2014, according to a report.

In her final report, groceries code adjudicator Christine Tacon said the 10 regulated retailers were “now exemplars among businesses for paying on time”.

The report said: “Recurring themes involving delay in payments included the persistence of unilateral deductions and the practice of holding back entire invoices while one element is queried, as well as too much time taken to resolve disputes.”  

The 10 retailers are Aldi, Asda, Co-op, Iceland, Lidl, Marks & Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose – those groceries retailers with turnover of more than £1bn.

The retailers paid 93%-100% of all their invoices on time, while only 13% of the suppliers to those retailers achieved the same level of prompt payment, the report said.

It added competition had increased in the sector as three more retailers – Ocado, B&M and Home Bargains – now exceeded £1bn turnover of groceries and been designated by the Competition and Markets Authority to be regulated by the GCA. 

Tacon said: “There is stronger and more effective communication between retailers and suppliers; this is a significant change, the value of which has been apparent in the current coronavirus crisis and the resultant need to maintain very efficient supply chains.

“Suppliers feel more able to challenge the retailers to get the best joint solutions – no longer is the response, 'How high?' when the retailers ask them to jump.”

Tacon added that regulated retailers had shifted from practice-based compliance to enduring culture change,  “driving effective compliance risk management at all levels in every regulated business”.

Earlier this year, Tacon announced she would continue as GCA for up to six months to maintain continuity through the coronavirus outbreak.

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