An Asda supplier, who had followed the negotiation process last year and had seen the document, said he felt “disappointment” with Asda. “Of course, we get used to difficult negotiations, but it went beyond that and did not reflect the partnership approach we want with retailers. It was about how much they could unscrew from us,” he said. Buyers are also informed to get better terms from their suppliers by demanding money for sectors such as marketing and waste. “Of course, suppliers should be challenged to fund marketing costs,” he explains. It also tells buyers, “Suppliers should compensate products that are marked or discarded because customers don`t buy them.” In addition, suppliers should co-finance the investments: “We invest a lot of capital in new land every year and our suppliers can help pay for it.” Home / Knowledge Base / Asda refuses to pay suppliers The company, cited earlier this year as the worst supermarket in its treatment by suppliers, demanded advances of up to a quarter of the value of the annual turnover of certain products to allow suppliers to keep their place on the shelf. Ipswich Packaging Services Ipswich Packaging is a leading supplier of packaging products for retail and industrial customers in Suffolk, Norfolk, Essex, Cambridgeshire, Hertfordshire and London from Duncan Swift, Head of Food Industry for global business advisory firm RSM Tenon, is an expert in retailer-supplier negotiation. “Retailers have been doing this for years,” he said. “Unfortunately, these are standard tactics and I`ve seen it before.” The watchdog said there was no need to open an investigation.
According to him, Asda “proactively cooperated with suppliers to correct lump sum agreements that should not have been concluded” and took other security measures to avoid further breaches. Some of those who refused to make these payments, higher than those agreed in suppliers` contracts, were asked to be ousted in just four to eight weeks, according to industry monitoring. One supplier with a 30-day payment agreement, who preferred not to be quoted, said he reacted with “dismay” by slowing down the terms. However, while suppliers are not forced to change their contracts, the standardised terms – which Asda says has always indicated 60 days of payment as the standard – appear to contradict the government`s attempts to tighten the supplier`s terms and protect small businesses. The letter said new terms would cover “everything we buy from you to sell to our customers.” He referred to a private section on the company`s website that informed suppliers that standard payment terms lasted 60 days. If suppliers did not ratify the new terms by June 15, the letter said they would be treated by default “as if they had agreed that the terms would settle your delivery.” While the code does not prohibit retailers from requiring suppliers to bear costs such as marketing and waste, it prohibits retailers from “obliging” suppliers to do so under duress and making retroactive changes to delivery agreements. The code also states that any decision made to stop the buying of a product must be made for genuine commercial reasons. Another major retailer is objecting to its contractual obligations to pay for ordered goods, as the news shows that supermarket chain Asda refuses to pay its garment suppliers all orders already placed.
A spokesman for the supermarket said suppliers should immediately contact Asda with concerns on terms other than those indicated in the simplified documents. The prompt payment code signed by Asda invites companies to limit themselves to a maximum payment term of 60 days, but adds that they “will anchor a 30-day payment term as a standard for all signatories as standard practice.”