New Tesco FOB terms irk suppliers

Suppliers angered by sudden change in supermarket giant?s payment terms, which increase from 60 to 90 days
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FOB suppliers are up in arms about a sudden decision by Tesco to increase its payment terms from 60 to 90 days.

With many small to medium-sized suppliers already struggling with cash-flow problems, the decision has been met with anger and incredulity by the trade.

“It is open war with Tesco, there’s no-one I know that is agreeing to this, with most saying they’ll just walk away,” said one angry distributor.

Even larger suppliers have been wrong-footed by the move, with one adding: “Any retailer changing payment terms half way through a trading year is always going to be a problem for suppliers, big or small. When it is a major retailer, the problem is amplified significantly and it creates a feeling of ‘gun to head’ that sours a relationship and in the current environment can lead to cash-flow issues for smaller suppliers. No question it is ‘sharp practice’.”

A Tesco statement to ToyNews said: “Tesco International Sourcing has contacted non-food suppliers to standardise payment terms to 90 days from receipt of invoice. We have an excellent record of paying on time and suppliers tell us that certainty of payment is what is important to them. Our business depends on strong relationships with suppliers and we continue to engage in regular dialogue with them.”

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