Fine food businesses have the chance to influence Government policy on payment terms after ministers announced a crackdown on late settlement of invoices.
The Department for Business & Trade in July opened a consultation on measures including forcing all firms to pay bills within 45 days and add hefty interest to overdue sums.
Prime minister Keir Starmer said chasing cash was “unfair, exhausting and holding Britain back” as he launched the Government’s Small Business Plan.
One wholesaler, who wished to remain anonymous, told FFD that it was sometimes owed millions of pounds by retailers for goods it had already paid suppliers for.
“We pay on average within 45 days and our customers typically pay us on 60 days,” they said. “We provide retailers with a service because small independent producers want paying quickly and we have cash in the business.”
The wholesaler said shops held the upper hand when buying from small producers.
“If you have an ongoing relationship, no-one in their right minds will take a customer to court.”
They added: “Some unscrupulous retailers who owe a wholesaler money will just order with another one.”
Marcus Carter, founder of Artisan Food Club, said: “I had a wholesale business in London for five years, and you have to decide who to pay. ‘I would like to pay one supplier but I am low on stock with another one, so if I pay them I can place an order and hopefully generate some sales to pay the other guy.’ It is a juggling act.”
However he said suppliers with strong wares would be treated well by shops.
“The only producers having a problem with credit control are the ones with bad products that don’t sell. Most food retailers need stock or their customers complain.”
Carter said shops should be able to sell a full order within twice the time of paying for it.
“If you supply £120 of product on 30-days terms, the retailer should sell £60 by 30 days and the next £60 in the next 30 days or you are a negative cashflow investment.”
John Farrand, managing director at the Guild of Fine Food, said the proposed legislation “could be divisive at the smaller end of food and drink”.
“No one would complain if the supermarkets were compelled to pay all suppliers more expediently,” he added. “It’s a bit more nuanced for delis, farm shops and their suppliers.
“Favourable payment terms can help a retailer through the slower months in the year and as employment costs rise, this may be a lifeline for survival. As with any salient Government consultation it is well worth a read and submitting your thoughts. Have your say!”
This article first appeared in the September issue of Fine Food Digest.
