Samworth Bros lorry

Samworth Brothers has demanded its suppliers switch to 60-day payment terms as part of an overhaul of its procurement process that will also see it rationalise its supply base.

In a letter to suppliers seen by The Grocer, Samworth Brothers said it was ‘updating our standard payment terms to 60 days from receipt of an accurate and valid invoice’ after a review found it was ‘significantly out of kilter compared to the industry norm for payment terms’.

The company, which owns the Ginsters brand, also said it aimed to ‘rationalise the supply base whilst offering prompt payment and more volume demand to fewer suppliers’.

The changes, which were due to come into effect in September, mean some of its suppliers will have to wait as long as 30 days extra to get paid, sources claim.

“Food manufacturers are now sending emails to smaller suppliers demanding they change payment terms without negotiation,” said one source. “If a retailer acted like that they could be hauled up in front of the Groceries Code Adjudicator.”

However, a spokeswoman for Samworth Brothers stressed the new standard payment terms were comparable to “many others” in the sector.

“Historically we have had varying payment terms across the group,” she added. “The only recent change is that we have moved to a more uniform approach.”

It comes as the company’s latest accounts revealed its sales exceeded £1bn for the first time in 2017. They jumped 7.2% to £1.02bn in the year ended 31 December.

However, pre-tax profits fell from £45m to £25m as margins fell almost 3% amid raw material cost inflation.

“The marketplace continues to be challenging and we remain in a period of material cost inflation but we will seek out new opportunities in 2018,” it said.