Comment: Retail needs successful suppliers

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It is in everyone’s interests for suppliers to be given financing support.

Last month, Sainsbury’s, along with a number of other companies, attended a meeting at Downing Street to lend our backing to the Government’s efforts to encourage more big businesses to support their suppliers.

Given the continued economic climate there’s never been a more important time for this kind of action.

Sainsbury’s has a good track record in this area. As far back as 2007, we were one of the first retailers to introduce a supply chain finance scheme, known as the Sainsbury’s trading finance platform, designed to help the SMEs that make up a significant proportion of our supplier base.

Our trading finance platform enables our suppliers to receive payment for invoices early, in return for a small financing cost. Several hundred of our suppliers are registered to use the platform and we constantly market the system to our supplier base to highlight the benefits.

Users of the platform tell us that it helps them to manage cash flow and free up resources. Small suppliers may be used to doing something similar elsewhere – the practice of ‘factoring’ their invoices.

However, we believe the trading finance platform provides a superior offer as, unlike factoring, there are no facility fees, no percentage reduction on the face value of the invoice and the cost, linked to Sainsbury’s credit, is more competitive.

As retailers we all have the opportunity to make a real difference to those SMEs that supply us and at the same time provide a welcome boost to the economy.

We always aim to work with our suppliers, from our consistent support for the Groceries Supply Code of Practice in food to our 75-day payment terms for general merchandise suppliers – ahead of standard practice in our industry.

We also have our own legally binding code of commercial practice that is issued to all our suppliers as part of our commitment to sourcing with integrity.

Despite – or because of – the tough climate, you can only be a successful retailer if you have successful suppliers. Retail is a team game and it’s in everyone’s interest for suppliers to be given financing support.

Time and time again retail has shown itself to be one of the most dynamic sectors in the UK when it comes to adapting and evolving to the needs of the wider economy.

While it is reassuring to know that a number of large companies have also lent their support to the recent Government initiative or implemented their own similar platforms, there are many others of similar scale that have not.

I hope more companies agree to sign up as soon as possible. Strong suppliers lead to a strong economy. And that is in everyone’s interest.