UK supermarket chains Tesco and Asda are increasingly relying on suppliers for free credit to fund growth, according to the Financial Times.

A Financial Times investigation into the accounts of UK supermarkets shows they derive finance from their suppliers to a much greater extent than most of their main rivals in Europe and the US, the paper said.

The amount owed to Tesco’s creditors has risen by GBP2.2bn (US$3.8bn) in the past five years, while its stocks have risen by GBP700m, providing GBP1.5bn to fund its business. Trade creditors on Asda’s balance sheet have risen by GBP700m, while stocks have risen by 200m, yielding GBP500m.

“An increasing proportion of our business is now done overseas where traditionally longer payment terms exist,” the paper quoted Tesco spokesman Jonathan Church as saying. “Similarly we sell more non-food nowadays where the payment terms are traditionally longer.”

“We have a good record of payment on time and our terms are always agreed upfront with suppliers,” he said.

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Asda said its accounts gave an inflated view of the proportion of trade creditors in its stocks because they provided a snapshot at its year end, which was not representative of the whole year, the paper said.