B2B Payments

Small Firms To See Faster Payments From Tesco

The U.K. is the world’s hot spot in the late payments debate, where the conflict over large corporations paying small suppliers over longer periods of time has brought into question the practice of stretching out an outstanding invoice.

But U.K. grocery giant Tesco is looking to buck that reputation. Reports in The Telegraph yesterday (Tuesday, Oct. 6) said Tesco will cut the time it takes to pay its smallest suppliers to just 14 days.

[bctt tweet=”Tesco will cut the time it takes to pay its smallest suppliers to just 14 days.”]

But there’s a catch: depending on the company, some sellers will have to wait far longer to see a payment from Tesco. Reports said some of the larger suppliers of the chain will still have to wait as much as 55 days to see their invoices settled.

Tesco Chief Executive Dave Lewis announced the new policies Tuesday, which will see suppliers with yearly sales of less than £100,000 securing a two-week payment contract. The plans were revealed at the IDG Conference.

“One of the things that made Tesco great was the little things we did to help our customers,” Lewis said at the event, according to reports. “We want to work with our suppliers to get back to innovating on behalf of our customers and these changes will make it easier for us to do that.”

Reports said that the time it takes for Tesco to pay suppliers will depend on the category of merchandise sold by the supplier. For example, sellers of fruit, vegetables, meat and fish will be paid within 23 days; beer, wine, clothing and other merchandise retailers, however, will be paid within 55 days.

Still, Tesco has reportedly reduced its payment terms to five days shorter than the current average in the industry. But reports also pointed to the fact that Tesco came in at No. 1 when it comes to the number of supplier complaints in this year’s Groceries Code Adjudicator list. Earlier this year, Tesco rattled its suppliers by emailing them demands to slash prices; reports said reduced payment term policies appear to be an effort by the company to improve its reputation and boost transparency.

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