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October 07 2015
Tesco CEO, Dave Lewis, announced at a retailing industry conference on Tuesday that the company's payment terms would be standardised and simplified in the next nine months and that this would include much faster payment terms for small and medium sized buisnesses that supply the supermarket giant.
Small suppliers, those that do less than £100,000 of business with Tesco each year, will see their invoices paid in only 14 days.
Medium sized businesses, those with up to £10m of business with Tesco, will also benefit from the new policy. The time taken to pay their invoices will also be reduced to a level that depends on the kind of goods they supply. Terms for these types of company will vary from 23 days to 55.
Samantha White, CEO of My Credit Controllers commented:
"While this initiative has clearly won Tesco some much-needed positive press, I wonder just how much of the company's spend is actually affected by the headline-grabbing 14 day figure. Is this an almost cost-free gesture by Tesco?"
"I'd also note that there's often a world of difference between the published payment terms of large companies and the length of time smaller suppliers actually have to wait to be paid. Big businesses have a drawer full of excuses and reasons to avoid paying on time, and they know they can get away with it. You're credit control team has to be right on top of them at all times."
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