Selfridges demands fees from suppliers for payment

The luxury department store wrote to its supply chain demanding at least 3pc of the value of their invoices as a “settlement discount” in return for the retailer paying bills within 60 days, it has emerged.

Suppliers were also given the “option” of sacrificing 5pc of their invoice value in order to be paid within 21 days, or giving away 4pc to have bills settled within 30 days, reports The Telegraph.

The demand was made in the same month that Selfridges boasted that its annual sales had breached £1bn for the first time and that operating profits rose 5pc to £133m.

The Forum of Private Business accused Selfridges of engaging in an “unfair” tactic to boost its own cash flow at the expense of the companies it works with.

“While we understand the pressures being faced by high street retailers, it seems neither fair nor right that they are asking suppliers to take a big hit in this way, especially without any meaningful discussion beforehand.

“While some suppliers may be in a position to agree the deal, others won’t, and then it’s a stark choice of waiting longer for their cash, or getting it quicker but losing a sizeable chunk. It really is a case of putting them between a rock and a hard place.”

A disgruntled supplier said the changes to Selfridges’ payment terms affected outstanding orders where payment terms had previously been agreed as well as new orders.

The retailer, which has outlets in Manchester and Birmingham as well as a 540,000 sq ft flagship store in the heart of London, is the latest in a string of famous high street names to pile the pressure on suppliers.

In February, the Daily Telegraph revealed that John Lewis told its suppliers they are to be subject to a rebate of up to 5.25pc on their annual sales with the retailer because it needs “all parties to participate in showing their ongoing commitment”.

The following month, Laura Ashley demanded an “immediate cost price reduction of 10pc” including on “orders already placed” from suppliers.

Debenhams has also been accused of putting the squeeze on its supply chain after it told companies it works with that it intends to cut prices by 2pc and delay payments from 90 days to 120 days.

A spokesman for Selfridges said the changes were made in October last year “to align the conditions of the payment of all its suppliers in line with current industry standards”.
It had previously settled invoices within around 75 days.