Aldi, the German retailer, is reducing the time it takes to pay its small suppliers to 14 days. The new terms, effective as of 11th September, will apply to 100 or so suppliers that transact up to €300,000 worth of business annually with Aldi.
The terms are very competitive with industry norms. Figures from the Small Firms Association, based in Ireland, indicate that on average it takes 62 days for a small firm to get paid, even though the majority of contracts offer credit terms of just 30 days.
Finbar McCarthy, Group Buying Director at Aldi, said “we recognise that cost pressures across the supply chain are increasing and placing a strain on smaller businesses in particular. Reducing payment terms to our smaller suppliers should help ease some of this pressure.”
Aldi says that the initiative is just one of many it has put in place to support its supply base. These include ensuring suppliers do not make any financial commitments without prior assurances on cost and volumes, keeping buying patterns stable throughout the year, and not running “buy one get one free” or multi-buy promotions.
This news follows in the footsteps of the likes of Waitrose, Asda, Morrisons and Tesco who have also put similar payment terms for small suppliers in place.
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