Sainsbury’s signs Prompt Payment Code
Photo Credit: Andrew Eadie via Compfight cc


Just four months after being ‘named and shamed’ by the Forum of Private Business for behaving poorly towards their clients, the supermarket chain Sainsbury’s has pulled off an impressive turnaround by signing the voluntary Prompt Payment Code.

The PPC is a voluntary commitment towards treating suppliers fairly – and in particular, to settling invoices as quickly as possible, to help keep suppliers’ cashflow looking healthy.

Last week, reports circulated that Sainsbury’s had signed up to the Code, giving the retailer some much-needed positive PR where their payment terms are concerned.

In October, things were very different, as the FPB criticised Sainsbury’s for increasing their standard payment terms to 75 days for non-food suppliers, a 2.5-times extension of their former 30-day terms.

Robert Downes, policy adviser to the FPB, described the 75-day terms as being akin to Sainsbury’s borrowing money from their suppliers, adding: “No right-thinking person could justify what Sainsbury’s is proposing as being fair and decent … [it] is scandalous, particularly from a profitable FTSE 100 company.”

While Sainsbury’s claimed they were simply aligning their payment terms with the industry as a whole, Mr Downes called this “utter fabrication”, and the FPB added the retailer to its Hall of Shame.

In the more recent reports, however, things have changed; not only have Sainsbury’s signed up to the PPC, but it has emerged that the move to 75-day terms was made with full consultation between the supermarket and its suppliers.

This has led to a double whammy of positive PR, with Sainsbury’s praised not only for committing to prompt payment, but also for the earlier collaboration when considering extending their invoicing period.

Overall, it is good to see any major brand signing up to a voluntary charter that promises prompt payment, and it’s also good to see ethical invoicing procedures appearing in national news headlines – a timely reminder to suppliers in all vertical markets to make sure they are doing what they can to protect their revenues, and avoid being seen as a free source of short-term funding by their customers.


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