Alliance Boots has said that it will pay its suppliers up to 105 days after billing

Alliance Boots has said that it will pay its suppliers up to 105 days after billing and (if that wasn’t enough) will then charge a 2.5 per cent “settlement fee”. It’s enough to make the eyes water, and despite Alliance Boots claiming that their procurement standards “are in line with those of other groups of similar size and scale”, the news will come as a hammer blow to suppliers who are coming under increasing pressure as times get tough.

I suppose there’s nothing wrong with that if it’s been agreed to before the supplier sets their prices, at least they’re up front about it.

I don’t think that I’d be rushing to do business with them, but they’re a better credit risk than most and presumably their suppliers factor in the extra costs caused by slow payment when they negotiate their rates.

If you think of it as more like a discount for payment within the agreed terms then it seems more acceptable.

As I say, providing the suppliers have agreed the terms and set their prices accordingly then I don’t see a problem with it.

I’m thinking of going into Boots and asking if they’ll offer the same terms to their customers as they require from their suppliers.

Posted under Late Payment

Posted by Alec at 12:25 pm, July 1, 2008

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