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   Supermarket wars harming small suppliers with late payment and price squeeze

Supermarket Wars Harming Food Supplier SMEs

April 23 2015

The number of SME food suppliers in financial distress has risen by 120% in 12 months according to analysis by Begbies Trainer.

While shoppers may welcome the established supermarkets slugging it out in a price war with deep discounters Aldi and Lidl , the way they are financing it by squeezing suppliers with lower prices and delayed payments is having severe knock-on effect in the food supply industry.

According to Begbies Traynor’s research monitoring the financial health of UK companies, the food retailing industry continues to experience rising ‘Significant’ financial distress, increasing 66% to 4,696 struggling businesses over the past year.

However, the main effect has been on the UK’s food manufacturing industry. Companies in this sector, many of which supply the major UK supermarkets, that are categorised as experiencing ‘Significant’ distress have risen an incredible 94% from 728 in 2014 to 1,414 in 2015.

Samantha White, CEO of My Credit Controllers warned:

"If your business is supplying goods or services on credit to food companies that supply the major supermarkets now could be a good time to review your risk profile. If you do not have an in-house credit control team, why not think about outsourcing this critical business function. If you just have overdue invoices to companies in this sector, you could use a commercial debt recovery service such as CreditXS to bring these in quickly and reduce the chance of being caught by a bad debt."

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