The programme, which aired on BBC2 last night (December 16), cited the letter as claiming a “prompt settlement discount” of up to 3% would apply if 2 Sisters paid within this time frame.
If suppliers rejected this, a default period of up to 120 days would apply, or, in special cases, up to 134 days, according to the letter.
The EU Late Payment Directive stipulates a firm should take no more than 60 days to settle bills.
“The main argument 2 Sisters makes … appears to be that these unfair payment terms are only a negotiating position,” said the FSB in a statement.
‘Poor defence’
“This is a poor defence at best, and misses the point that small firms do not have the power or resources to reject such unfair terms, nor to get recompense when terms are breached.
“This is why we are calling for the Prompt Payment Code to be strengthened. All firms should be on a fairer footing when negotiating payment terms, and it’s vital we outlaw unreasonable terms and conditions being imposed on suppliers.”
The Prompt Payment Code is administered by the Institute of Credit Management on behalf of the Department for Business Innovation & Skills. It is designed to promote best practice, paying suppliers on time and clear supplier guidance. Firms are encouraged to sign up to the code on a voluntary basis.
The FSB also highlighted its support for the Small Business, Enterprise and Employment Bill 2014-15, which had its second reading in the House of Lords on December 2 and was “a golden opportunity” to tackle late payments and other supplier abuses, it said.
‘Working tirelessly’
An FSB spokesman told FoodManufacture.co.uk: “Late payment is a really significant issue and something we are working tirelessly on. The Small Businesses Bill is one key element of that.”
2 Sisters said the letter was intended to be the starting point for a negotiation and claimed it took an average of 49 days to pay suppliers last year.
In a statement quoted by Newsnight, 2 Sisters said: “Ultimately, the supplier can choose not to trade on any terms it feels is unsuitable, and we abide by standard business-to-business payment protocols where payment can exceed 60 calendar days as long as this is expressly agreed in the contract.”
If you are a 2 Sisters supplier and wish to provide positive or negative comments regarding its trading relationship with you, please contact michael.stones@wrbm.com.
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