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UK Banks and supermarkets accused of conspiring to rip off suppliers

| International retailers

Supermarkets have been accused of ‘bully boy tactics’ by offering their suppliers bank loans instead of swiftly settling their invoices. A report by the Daily Mail said that Morrisons and Marks & Spencer have introduced schemes that delay the payment of invoices to small businesses that supply them with products.

The newspaper said that suppliers have to wait up to a month longer to have their bills paid, but if they cannot hold on this long, the supermarkets offer them access to credit from a bank.

Read the full article on the Telegraph website

Commenting on the report, Tracy Ewen, Managing Director of IGF Invoice Finance, said: “Credit alone is not a bad thing; forcing suppliers to accept credit or face going out of business is. For many small businesses this is not a sustainable practice, yet it is a reality that they have very little power to change.

“It is the government’s responsibility to introduce stronger regulation to protect SMEs, many of whom are facing intense cashflow pressures from abuses of power by some of the UK’s largest companies - including the supermarkets. If nothing changes, we may see small companies fold unnecessarily. This could have a severe impact on how the supermarkets themselves are able to operate – and could also have a knock-on effect on the economy as a whole.

“For those firms mired in long payment terms, there are options available that cover the gap between work completed and money in the bank. It’s therefore important for firms to thoroughly review their options and make use of any free financial advice that their financial partners and suppliers can offer before allowing pressure from large customers to impact their growth or operations.”

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