Amid rising market volatility, some large organizations have positioned themselves to support their small suppliers by accelerating payment terms. The grocery industry has been among the most active sectors in supporting cash flow through supply chains, and this week's B2B Data Digest finds Ireland's supermarket industry continuing those efforts.
Yet not every company has followed suit. Also included in this week's roundup are reports of a hospital conglomerate delaying supplier payments as a result of M&A business continuity friction. PYMNTS rounds up the latest data in late B2B payments news below.
14 days is the typical payment term for Tesco Ireland suppliers, but the grocery chain has reportedly vowed to pay select small vendors immediately upon receiving an invoice, reports in European Supermarket Magazine said. The policy will be in effect until the end of January 2021, as the grocery conglomerate positions itself to promote cash flow through its supply chain and to support struggling small businesses.
"We recognize the ongoing challenges in the food sector, especially for small suppliers, so it is vital that we do our best to support the small supplier partners we work closely with," said Tesco Ireland Commercial Director Joe Manning in a statement, adding that the suppliers are "local, often family-run businesses."
A 24 percent increase in supplier spend by Aldi Ireland will see the Irish grocery company move to continue its accelerated vendor payment policy to keep its supply chain healthy. According to recent FFT reports, Aldi Ireland is extending its fast-track supplier payment policy for more than 200 vendors across the country through the end of the year, after first announcing the initiative last March. The company has shortened vendor payment terms for suppliers that have up to €1 million in annual turnover, with Aldi Ireland processing invoice payments within five working days.
"Getting payments flowing back to farmers in a prompt fashion is vital, and I hope we can see more work being done on this in the period ahead," said Dara Calleary T.D., Ireland's Minister for Agriculture, Food and the Marine, in a statement. "Cash flow is such an essential component for farmers, particularly our small farms and family-farm businesses, at this time."
In addition to accelerated B2B payments and heightened spend, Aldi Ireland is also working to expand its vendor base as part of its Grow With Aldi supplier development initiative, reports said.
90-day payment terms from Steward Healthcare were the result of internal B2B payment policy, a new Bloomberg report revealed. In an examination of the Texas-based for-profit company that owns a group of medical centers, reports highlighted internal efforts to extend supplier payment terms beyond 30 days to as long as 90 days or more.
In an interview with the publication, Mike Green, a former controller at three of the company's Ohio-based hospitals, said Steward Healthcare had instructed staff to extend vendor payments, with consequences for hospitals' procurement activity.
"It snowballed to where we were struggling to get supplies in a timely manner," he said, adding that some vendors stopped supplying services to the organization entirely. Others have initiated legal action against the healthcare system. Two advertising companies, for instance, have reportedly sued to collect on overdue invoices amounting to more than $2 million, while a New York utility sued for $250,000 in allegedly unpaid natural gas bills.
In a statement, a representative for Steward said the organization has resolved these disputes and noted that delayed supplier payments are the result of the challenging nature of integrating and streamlining B2B payment processes across the hospitals it has acquired.
3,400 vendors within Scientist.com's supply chain will have a chance to receive early payments, according to the digital healthcare and life sciences research marketplace. In a press release, Scientist.com announced that qualified suppliers, including those with Small Disadvantaged Business (SDB) certification, as well as those that are Black-owned, Black-run or majority-held by minorities, can qualify for the initiative, which will see Scientist.com pay vendors early without any cost.
"Diverse and disadvantaged suppliers, typically small-to-medium enterprises (SMEs), struggle to maintain enough working capital to run their operations," said Scientist.com SVP of Finance Kristopher Kagan in a statement. "We are providing early payments to diversity businesses to help eliminate cash constraints and enable them to focus on growth and innovation."