Blog: Early payment push
Dean Best | 6 February 2009
The recession in the UK has seen the return of one controversial topic to the spotlight, as attention is once again drawn to the sometimes-strained relationship between retailers and suppliers.
The subject was broached in this week’s Prime Minister’s Questions, when St Ives MP Andrew George called on the PM to "act swiftly to defend the interests of thousands of farmers and grocers who supply the larger supermarkets".
As economic conditions worsen and credit lines dry up, many suppliers are finding the going tough. In these circumstances, the delay between delivering goods and receiving payment can be make or break.
George said the practice of delaying payment is "damaging consumer interest and [is] to the detriment of farmers and growers both here and in the developing world".
Responding to these comments, Gordon Brown answered: “We are asking supermarkets to change their practice and introduce early payment to their suppliers."
With the government beginning to intervene in dealings between retailers and manufacturers, we are likely to hear more on this topic in the near future.
However, as yet, there has been little sign that the government is making significant headway on establishing an ombudsman to oversee the sector.
This was the most controversial issue to come out of last year’s Competition Commission investigation into grocery retailing in the UK.
It has raised hackles on either side of the fence – with retailers insisting that it is an unnecessary burden.
Indeed, if the government were to follow through with the plan during the downturn, from a retailer’s perspective, the timing couldn’t be much worse: the UK’s grocers will be expected to foot the bill when profits and margins are already under considerable pressure.
To replay last Wednesday's (4 Febraury) PMQs click here.
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