Asda reduces payment terms for small suppliers

UK supermarket chain Asda is reducing its payment terms to 14-days for smaller suppliers, as part of its on-going efforts to work more effectively with its supply base.

The move it said will benefit around 1,200 small suppliers with up to 250,000 pounds worth of business with Asda said the supermarket. The first group of around 430 suppliers will move to the new terms this month.

“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,” said a spokesperson for the supermarket. “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 fourteen days for our smaller suppliers.”

The move adds to a number of mechanisms it has in place to support its supply base, including simplifying its terms and conditions and providing access to early payment finance options, said the supermarket giant.

Other initiatives include its ‘Sustain and Save’ programme that aims to help businesses to become more efficient and reduce their operating costs. In addition, it recently launched an app that allows suppliers to share and swap excess products with other companies who may be able to make use of them. This programme has recently been rolled out to the regions to lend further support to local suppliers.

The reduced payment terms have been welcomed by Philip King, chief executive of the Chartered Institute of Credit Management who added: "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.”

Image: courtesy of George at Asda