Food suppliers face longer wait to get paid

Payment delays to UK food producers have increased to an average of 45 days, according to research by online business finance specialist Funding Options.

The company, which helps businesses find alternative finance when they are unsuccessful with the major banks, carried out a payment survey of the UK’s largest 200 food producers.

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Analysis of the figures showed average payment delays had crept up by one day from 44 days last year.

Funding Options chief executive Conrad Ford said : “We are increasingly seeing food producers suffering from cashflow issues as a result of late payments.”

Just a few late payments can seriously affect food producers’ financial stability, Mr Ford added.He blamed the worsening supermarket price wars, which were putting retailers under pressure to improve their cash position.

Consolidation in the sector could put food producers in a weaker position when negotiating deals and contracts with buyers, he warned.

“The mergers and acquisitions activity we are seeing in the supermarket sector will worry food producers, who rely on healthy competition between retailers to win more sensible contract terms,” Mr Conrad said.

NFU chief food chain adviser Ruth Edge echoed Mr Conrad’s concern over cashflow.

“Delayed payments to retail suppliers are unacceptable and can put unnecessary stress on the cashflow of a business, which could be passed down the supply chain to farmers and growers.

“This is particularly important for small and medium enterprises,” said Ms Edge, who applauded the work of the groceries code adjudicator on payments to suppliers.

“It is pleasing to see that retailers are signing up to the Prompt Payment Code. We hope this work leads to a decline in the time taken for payments to reach producers in the future,” she said.