Asda cuts small supplier payment terms to 14 days

The payment changes will benefit about 1,200 small food and drink suppliers with under £250,000 of annual business with Asda, it claimed. The UK’s third largest supermarket made the move as part of its plan to work more effectively with its supply base, it said.

An Asda spokesman said: “Our relationship with our suppliers is vital to ensuring we can do the best job for our customers, and we continue to focus on building strong partnerships with them, many of whom have been with us for decades.​

‘Work more effectively together’​

“We’re always looking at ways we can work more effectively together and we believe it is the right thing to do to reduce our payment terms to 14 days for our smaller suppliers.”​

The first group of about 430 suppliers moved to the new terms from June 1.

The Chartered Institute of Credit Management welcomed Asda’s new payment terms. The credit management community’s representative said the deal would boost retailer/supplier relations.

Its chief executive Philip King said: “Treating suppliers fairly by accelerating payments, simplifying terms and conditions, and offering supply chain finance are important tools for maintaining a strong customer/supplier relationship.​

“Certainty of payment, and professional credit management, help businesses of all sizes to better plan for the future.”​

Morrisons, Waitrose and Tesco​

Asda’s payment pledge came after Morrisons, Waitrose and Tesco made similar pledges.

Morrisons’ pledged in March to reduce payment time​ to its small-scale food and drink suppliers. The 14-day payment terms affected more than 3,000 of its suppliers, it said.

In July 2016, Waitrose vowed to cut small supplier payment times to seven days​. More than 600 small food and drink suppliers, whose business with Waitrose was worth less than £100,000 annually, benefitted from the deal, said Waitrose.

Tesco moved to a 14-day small supplier payment​ plan in June 2016. The plans meant small suppliers were typically paid 34 days faster than in the previous deal.