British department store chain Debenhams has angered its suppliers in recent weeks by demanding discounts in return for speedy payments.
It’s the second time in three years that the retailer has made such a request and the U.K.’s Federation of Small Businesses (FSB) has aired its irritation.
“Businesses have a responsibility to pay their suppliers in a timely fashion,” Mike Cherry, FSB national policy director, told The Guardian. “Large firms should not be permitted to award themselves an automatic discount for doing what they should—pay on time.”
According to media reports, Debenhams has asked suppliers to reduce their bills by between 1 and 2 percent in exchange for paying them 30 to 60 days earlier than their current agreement. The shorter payment terms will apply Nov. 24-May 26.
“We are concerned and disappointed by this latest example of poor payment practices from Debenhams,” Cherry continued. “Sadly, it is not the first time we have seen the retail giant behave in this way and would have hoped that by now, it would have improved its behavior.”
In 2013, the retailer asked its suppliers for a 2 percent price-cut just eight days before Christmas in a much-criticized move that was labeled the “Santa tax” and later led to the resignation of then-finance director, Simon Herrick. A spokesperson said that this time it was temporarily amending its terms in response to requests.
“The scheme is entirely optional, as was made clear in our communication to our suppliers, and is intended to help their cash flow at peak periods,” the spokesperson said. ?“The offer has been welcomed and we continue to maintain strong relationships with our suppliers.”
But FSB is not convinced.
“It is simply unacceptable for any company to exploit its market position to enforce unfair and unreasonable payment terms,” Cherry said, adding, “It is time to put a stop to big businesses using their size and power to force small firms to accept late payment, excessively long payment terms, or demand automatic discounts simply for paying on time.”
Stateside, Walmart asked for smaller bills from some 10,000 suppliers of China-made goods in September, insisting on a share of the savings from the yuan’s devaluation.