GERMAN DISCOUNT chain Lidl has come under fire by British suppliers for its ‘unfair’ extended payment terms which forces many of them to wait four months for money.
A number of suppliers have complained to the supermarkets watchdog – the Groceries Code Adjudicator – about the treatment which is leaving some smaller suppliers in financial straits.
“It has been raised as a concern. Suppliers felt it was a big risk for them to have so much money outstanding for so long,” said Christine Tacon, who heads the Groceries Code Adjudicator.
Despite complaints it has been revealed that no formal investigation is being launched into the practice, which is contrary to the payment terms of just 1 month that Lidl offers its German supplier.
The UK does not currently enforce laws on payment terms, though a new voluntary Prompt Payment Code has been introduced by the Department of Business, Innovation and Skills which asks signatories to pay within 60 days.
There is worry that the system remains open to abuse regardless and that the squeeze on supply chains for smaller companies puts business growth in Britain at risk.
The story comes just weeks after Tesco, another leading grocery chain, was revealed to be putting its suppliers under pressure cutting back costs to the point in which smaller producers were unable to turn a profit.