Tesco has been slammed for opting out of a scheme designed to ensure fair treatment and rapid payment of its smallest suppliers.
Tesco, the UK’s largest supermarket, is understood to have abruptly quit the Prompt Payment Code, a government backed scheme which from July means retailers need to pay suppliers with less than 50 employees within 30 days.
According to The Times, Tesco quit the scheme on June 22, just days before the terms dropped from 60 days to 30.
The move has prompted a backlash against Tesco, which in 2016 was accused by regulators of prioritising its own “finances over treating suppliers fairly”, from small businesses.
“Tesco’s shock decision is bad news for good corporate governance and for leadership,” the Federation of Small Businesses’ chief of external affairs Craig Beaumont said, adding that the industry must not go back to the “bad old days”.
READ MORE: Tesco Bank faces backlash as it prevents customers switching soon-to-be-closed current accounts
Despite the controversy, Tesco says that the decision to leave the code was “solely to its new definition of a ‘small’ business and none of our small suppliers will be worse off as a result.”
The grocery giant says that it categorises its suppliers based on the annual sales it makes with the company, rather than their size.
During the pandemic, it extended special payment terms to suppliers with which it has annual sales of less than £250,000, and has now made these special terms permanent.
Under the new terms, 1400 of its 2500 suppliers are paid within five days of when their invoice clears, which it says is significantly faster than the code’s 30-day limit.
“We’re committed to supporting our smallest suppliers, which is why we’ve recently made permanent the improved payment terms we introduced to help them through the pandemic.”
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1 Comment. Leave new
Chris Harding
August 11, 2021 9:29 am
Actions speak louder than words though in fairness to Tesco. So long as they aren’t actually (and won’t be) treating their small suppliers like crap, it doesn’t really matter if they’re a member of some body promising that they won’t!
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