Sainsbury’s in ‘hall of shame’ over supplier payments

The supermarket giant has lengthened its standard payment terms to 75 days for all non-food suppliers. In some cases, this will mean suppliers waiting more than twice as long for payment, reports The Telegraph.

The Forum of Private Business, which lobbies on behalf of small companies, has put Sainsbury’s in its “hall of shame” for slow payers in response.

In a letter to suppliers – seen by The Daily Telegraph – Sainsbury’s said it had “recently reviewed our standard payment terms and note that they differ from industry standards and, as a result, they will be changing”.

It will now pay suppliers 75 days after it “accepts ownership” of goods. “For example, an invoice dated December 14 2012 will be paid on February 27 2013, with cleared funds being in your bank account no later than three business days of this date,” it said.
Some of the affected suppliers had been on 30-day terms.

Phil McCabe, of the FPB, said: “In moving from 30 to 75 days, Sainsbury’s is imposing a massive 150pc increase in the time it takes to pay – this is simply unacceptable. There has been no real consultation – a letter to suppliers telling them it is happening does not count, and the excuse that this is in line with ‘industry standards’ is just laughable. That is why we are naming and shaming Sainsbury’s in our late payment hall of shame.”

The FPB recently backed a campaign led by Labour MP Debbie Abrahams to encourage FTSE 100 companies to sign the Prompt Payment Code (PPC), a voluntary agreement to promote good payment practices.

“Sainsbury’s was one of just four [companies] to refuse outright,” Mr McCabe added. “It said its own payment practices were just as effective – clearly this is not the case. It is hard to fathom how a company of the size and stature [of] Sainsbury’s can behave in this way.”

A spokesman for Sainsbury’s said: “We have written to our [non food] suppliers about our intention to bring their payment terms more in line with the rest of the industry. This will be followed up individually with any suppliers experiencing difficulties in meeting this change. We are fully committed to ensure all payments to our suppliers are made on time.”