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Business group criticises Sainsbury's over supplier payment times

UK: Supermarket giant Sainsbury's has been criticised by the Forum of Private Business (FPB) for having increased all non-food supplier payment times from 30 to 75 days. However, a spokesman for the supermarket group told ACR News that the new payment times would not apply to air conditioning or refrigeration equipment suppliers, contractors, service or maintenance companies.
Business group criticises Sainsbury
The FPB claims that Sainsbury's wrote to those affected last month telling them it was set to make the dramatic increase following a 'review' which found their standard 30-day payment times 'differed' from industry standards.

The Forum has called on Sainsbury's to sign the Government's Prompt Payment Code, subscribers to which pledge to pay suppliers on time, and not to change terms and conditions mid-way through a contract.

'No right thinking person could justify what Sainsbury's is proposing - a 150% increase in the time it takes them to pay a supplier for goods provided - as being fair and decent,' commented the Forum's policy adviser, Robert Downes.

'With startling arrogance they have then tried to justify this increase by claiming 75 days is the industry standard. This is utter fabrication. This kind of borrowing from suppliers - whatever their size - is scandalous, particularly from a profitable FTSE 100 company like Sainsbury's, who are in no way financially challenged, but clearly just greedy.'

Research carried out by Bacs has shown around £37bn is owed to small firms in unpaid invoices in the UK at any one time, with slow payment a major headache for the supply chain.

Signing up to the Prompt Payment Code - like Tesco have done - helps safeguard firms and promotes best practice, the Forum says.

Added Downes: 'When suppliers receive a letter like the one Sainsbury's sent out, few have any choice but to agree to the new payment terms. There is little room for bargaining through fear they will lose the business, and no small firm in the current economic climate wants that.

'For the sake of small businesses and the economy, the Government must prioritise tackling the culture of poor payment, addressing the bully boy behaviour of these bigger companies.'

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