Dutch-owned meat giant Vion UK has enraged suppliers with moves to increase standard payment terms to up to 60 days.
One supplier to Vion UK, who asked not to be named, said his response to a letter sent on February 3 from Vion’s accounts department, was “not printable”. He added: “I was on 14 days, so this is a massive shock to the system. It all depends what area of the market you’re in, but in my area, it’s usually anything between 10 to 30 days. I also supply products to Aldi and Netto, and they pay in 35 days, so I was not very happy when I opened the mail.”The letter, which Food Manufacture has seen, explains: “Vion UK is keen on continuing and establishing where necessary strong long-term working relationships with its suppliers. Given the strong foundation of the Vion UK business, we expect to enjoy market competitive payment terms with our suppliers.
“On that basis, with effect from February 15 2009, our standard payment terms will be month end following to suppliers.”
Vion also attempted to dampen concerns about credit insurance in the wake of moves by several of the major insurance providers to withdraw or reduce cover.
It said: “Discussions have been taking place with all of the major credit insurers in the UK. They have all now confirmed their willingness to underwrite significant credit insurance commensurate with the size and financial strength of the Vion UK business.”
A finance manager at the firm said the payment term extension was a “head office initiative”. The manager added: “We have been asked to send the letter out to all suppliers.” The press office declined to comment.
Vion, which significantly strengthened its position in the UK market last year via the acquisition of Grampian Country Food Group, recently announced plans to cut more than 800 jobs in the UK.