Asda has revealed it is giving financial help to one of its oldest suppliers and offering to discuss with other suppliers any financial difficulties they are having.
In an exclusive interview with The Grocer, CEO Andy Bond said the main way Asda could help suppliers was "to keep growing our business". But, he added, if suppliers were having financial difficulties, Asda could in "certain very exceptional circumstances provide funding ".
"There is one particular supplier that we have a very good relationship with, that we are helping out financially," he said. " It is providing a unique proposition for us but we have also been working with this company for 40 years and that has emotion attached to it."
Bond rejected allegations that supermarkets were putting pressure on suppliers to give them better terms, and said that where suppliers were currently struggling it was often for financing reasons rather than because of poor operational profitability.
Asda was committed to supporting suppliers if they ran their businesses well, he insisted. "If companies are in financial difficulties because they are badly run, they deserve to go out of business. We are not a charity," he said. "But it is not in our interest for companies to go bust. We will talk openly to any company in financial difficulties."
Bond said he believed Asda's standard payment terms were good, but if suppliers needed cash early they could use Asda's Pay Me Early scheme.
"It's a 7.5% APR loan effectively," he said. "We pay 5,000 individual invoices a week, and 50 invoices are paid early each week, so it's only 1% of our invoices.
Asda's average payment term was 35 days, said Bond, adding that smaller suppliers were paid in 20 days on average, while some fresh food suppliers were paid in seven days.
"If we were to move payment from 35 days to 20, that takes £800m of cash out of our business and the interest charge on that would be £50m, which someone has to pay for somewhere," Bond said.
In an exclusive interview with The Grocer, CEO Andy Bond said the main way Asda could help suppliers was "to keep growing our business". But, he added, if suppliers were having financial difficulties, Asda could in "certain very exceptional circumstances provide funding ".
"There is one particular supplier that we have a very good relationship with, that we are helping out financially," he said. " It is providing a unique proposition for us but we have also been working with this company for 40 years and that has emotion attached to it."
Bond rejected allegations that supermarkets were putting pressure on suppliers to give them better terms, and said that where suppliers were currently struggling it was often for financing reasons rather than because of poor operational profitability.
Asda was committed to supporting suppliers if they ran their businesses well, he insisted. "If companies are in financial difficulties because they are badly run, they deserve to go out of business. We are not a charity," he said. "But it is not in our interest for companies to go bust. We will talk openly to any company in financial difficulties."
Bond said he believed Asda's standard payment terms were good, but if suppliers needed cash early they could use Asda's Pay Me Early scheme.
"It's a 7.5% APR loan effectively," he said. "We pay 5,000 individual invoices a week, and 50 invoices are paid early each week, so it's only 1% of our invoices.
Asda's average payment term was 35 days, said Bond, adding that smaller suppliers were paid in 20 days on average, while some fresh food suppliers were paid in seven days.
"If we were to move payment from 35 days to 20, that takes £800m of cash out of our business and the interest charge on that would be £50m, which someone has to pay for somewhere," Bond said.
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