Tesco has been lambasted by a leading consumer goods maker for forcing suppliers to wait almost two months before getting paid.
Bart Becht, chief executive of Reckitt Benckiser – which makes products such as Airwick air fresheners and Nurofen headache pills – said Tesco’s decision to extend the time frame for paying suppliers from 30 to 60 days could drive smaller suppliers out of business.
“There is absolutely no logic to that,” Becht told the Financial Times. “They turn over the inventory in much less [time] than 60 days, so why should they have 60-day payment terms?”
Tesco said it has only asked 300 of its suppliers to meet the new terms. The grocer said: “This is a measured move affecting only a small proportion of our suppliers. We compare well with our competitors.”
Earlier this month, Tesco wrote to suppliers telling them it planned to extend the time it would take to pay them from December 1.