A member of the UK200Group comments on news that Tesco is evaluating the way it pays small suppliers
A member of the UK200Group of independent accountancy and law firms has today commented on news that Tesco has announced a standardised payments system that from next June will see suppliers delivering up to £100,000 of products each year are paid within 14 days, and medium-sized suppliers are paid five days quicker than the largest companies.
Jonathan Russell, partner at UK200Group member firm ReesRussell, said: “Our experience from clients is that Tesco was by far the worst payer of all the major supermarkets, not only in negotiating (dictating) the worst terms but also being the worst at even paying within their own agreed terms. Tesco has a huge public relation problem and needs some positive measures in the press and this could be seen as one. Why wait till next June is probably financial; Tesco does not have a healthy financial position with very heavy borrowings and it may be that they need to raise more money to put this in place. The other thing to bear in mind is that as part of its restructuring and reducing its product range, many, if not all, of the smaller suppliers were dropped and it is doubtful now there are many suppliers who are in the sub £100,000 per annum category.”