Extended payment terms cause smaller suppliers to suffer, GIMA warns

Garden suppliers may benefit from proposed Government legislation that would force bigger?companies to be more transparent about payment performance.

Under the new legislation, Britain’s largest retail chains would be required to quarterly disclose how long they are taking to pay suppliers and if they have changed terms and conditions.

Retailers and suppliers have long been demanding extended payment terms, which is a major issue in the garden industry. Following the release of a letter published in The Daily Telegraph in February ? in which Homebase and Argos unilaterally demanded an additional rebate of 2% of turnover from suppliers ? GIMA has urged its members to stand firm as the new legislation, which could come into force this year, would benefit garden suppliers.

According to GIMA director Vicky Nuttall, ?GIMA would welcome a more transparent approach to payment performance so we can tackle the problem head on. As an industry we are particularly bad when it comes to paying our bills, but let?s not continue to blame it on seasonality and bad weather.

?As retail chains continue to grow and dominate our sector, the medium and smaller sized suppliers find it harder to compete, losing out to larger one-stop-shop suppliers who can afford the large rebates and extended payment terms.

?Moreover, Nuttall called for legislators to cast a wider net, extending their focus from just the larger retailer. She explained, ?It?s not only the retailers where the problem lies.? As suppliers? cash flows get squeezed, the affect is felt all the way down the supply chain. A risky scenario which may ultimately impact on the timely supply of finished goods.?

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