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Friday, December 26, 2014
2 Sisters Food Group’s supplier relationships attacked by BBC
2 Sisters Food Group, one of the largest suppliers of chicken in the U.K., has come in for criticism from the BBC following complaints from one of the company’s suppliers. 2 Sisters has responded that the BBC’s Newsnight program gave an “unfair reflection of how we manage supplier relations and payment terms.”
The company was accused of setting “beyond unreasonable” terms in proposed agreements by one of its suppliers.
According the BBC, 2 Sisters had been seeking more than four months to pay its bills and has asked for discounts if payments were made within 90 days.
A document seen by the BBC suggested that the company should not have to pay for goods or services until the last working day of the third month after they are received -- a potential wait of up to 90 days. The document further stated that if the company paid within this period, it may be entitled to a “prompt settlement discount” of 3 percent. Alternatively, should the supplier reject this option, the default payment period would be extended to 120 days.
In response to the criticism, 2 Sisters has said: “Our terms and conditions are negotiable with suppliers Ultimately, the supplier can choose not to trade on any terms it feels is unsuitable, and we abide by standard business-to-business payment protocols where payment can exceed 60 days as long as this is expressly agreed in the contract.
“We believe the Newsnight program gave an unfair reflection of how we manage supplier relations and payment terms.”
The company continued that it used its terms and conditions as a starting point for supplier discussions, and noted that it had long standing relationships with many suppliers who knew how its negotiation processes worked.
Professor Karle Williams, of Manchester Business School, told the BBC that a 3 percent discount would eliminate half of the net profit margin of a second tier food supplier and noted that 120 days was twice the maximum of 60 days for business-to-business payments set out in the European Union Late Payment Directive, adding that the terms offered by 2 Sisters were “pretty gross.”