This payment system is thought to be the first of its kind within the grocery sector and was unveiled by the company at a suppliers conference yesterday.
Sainsbury's, the UK's third largest grocer, is joining forces with Morgan Stanley, who will act as lenders to the suppliers. The bankers will give early cash settlements for invoices approved by Sainsbury's for a small interest rate and calculated against the supermarket's credit rating.
Sainsbury's, along with other major retailers, has been criticised in the past for squeezing its suppliers by making them wait longer for money owed to them.
All of the supermarket's suppliers will now be paid through this system, which is called the Trading Finance Platform. They will be able to view their invoices, debit notes, remittance advices and payment dates online, giving them a much better visibility of expected cash flow.
Sainsbury's trading director Mike Coupe said: 'This is a fundamental way of managing the financial relationship we have with our suppliers. The system provides additional benefits, giving suppliers the information they need to better manage their financial flows.'
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