Asda is reducing its payment terms for small suppliers to 14 days as it beefs up efforts to work “more effectively” with its supply base.

The supermarket giant said the move will benefit around 1,200 small suppliers whose business with Asda is worth up to £250,000.

Around 430 suppliers have switched to the new terms today.

Much like its big four rivals Tesco, Sainsbury’s and Morrisons, Asda is bidding to better support its suppliers and strengthen its relationships with them.

Asda has already simplified its terms and conditions, provides access to early payment finance options and runs a ‘Sustain and Save’ programme to help businesses become more efficient and reduce their operating costs.

The moves to strengthen ties with suppliers come as boss Sean Clarke continues his bid to rejuvenate the embattled chain’s fortunes.

Signs of recovery

Asda has suffered 11 consecutive quarters of like-for-like sales decline but has shown signs of recovery in recent Kantar Worldpanel data.

The Walmart-owned business delivered a 0.9% rise in sales during the 12 weeks ending May 21.

An Asda spokeswoman said: “Our relationship with our suppliers is vital to ensuring we can do the best job for our customers and we continue to focus on building strong partnerships with them, many of whom have been with us for decades.

“We’re always looking at ways we can work more effectively together and we believe it is the right thing to do to reduce our payment terms to 14 days for our smaller suppliers.”

Chartered Institute of Credit Management chief executive, Philip King, said: “Treating suppliers fairly by accelerating payments, simplifying terms and conditions, and offering supply chain finance are important tools for maintaining a strong customer-supplier relationship.

“Certainty of payment and professional credit management help businesses of all sizes to better plan for the future.”