Delivery note: Duncan Swift’s assertion that supermarkets are driving their suppliers out of business (Superstores drive small firms under, Business last week) is unfounded and incorrect.

Earlier this year, the Competition Commission, reporting on its exhaustive and continuing investigation into the grocery sector, stated there was “little evidence of any ongoing decline in profits” for manufacturers and processors.

We should note that Grant Thornton received only 50 responses from the 1,500 suppliers it approached. While Mr Swift claims the lack of responses is the result of a “culture of fear”, a more likely explanation is that supermarkets and their suppliers enjoy a mutually advantageous working relationship.

The Competition Commission’s own, much more extensive, survey of suppliers would indicate healthy supply relationships, with 94% of respondents saying they believe they will still be in business in five years’ time and 80% saying they have been able to invest in their businesses in the past two years.

Supermarkets’ main aim is to serve their customers through a viable, innovative and competitive supply chain. They recognise that treating suppliers badly is bad business, which is why both parties seek and generally enjoy long-term, constructive relationships.

Kevin Hawkins

director-general, British Retail Consortium

Bill stickers: In response to new research from the Institute of Directors highlighting the damage caused to small and medium-sized enterprises by late payments from big companies, we would argue the IoD is oversimplifying the issue with somewhat of a one-sided viewpoint – empirical data show that the big companies are actually paying earlier.

It is true that many, if not most, big companies deliberately delay payments to their suppliers, to improve their own working-capital position, especially around key reporting periods, such as the financial year-end, to make the balance sheet look stronger, the annual report rosier and for executives to collect compensation associated with achieving their cashflow and working-capital objectives.

Our most recent study of performance in this area – of Europe’s top 1,000 firms – shows that the UK’s largest organisations have improved the speed at which they pay their suppliers, of all sizes, and in fact “payable days” has reduced by 6% in the past two years. The time it takes firms to collect their cash from customers, “debtor days”, has also reduced by 6% in the same period.

In an ideal world you would expect people to pay on time for a service or product that was delivered on time, and there are many, big and small, companies that do act with integrity, but they are in the minority.

Steve Payne

chief executive

REL Consultancy Group

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