The Federation of Small Businesses (FSB) has responded to the Newsnight report that 2 Sisters Food Group has been criticised for poor payment practices.

It emerged that a contract had been proposed, where suppliers could be delayed payment for up to 120 days, and the food manufacturer could claim a 3% discount on payments, should it be required to pay within 90 days. 

John Allan, FSB national chairman, said: “Though 2 Sisters say they pay an average of their suppliers in fewer than 60 days, this is clearly not the same as paying all of their suppliers within 60 days as is mandated in the EU directive on businesses to business payment. It also begs the question, why do they feel the need to insist on 120 days as their standard payment terms, accompanied by an automatic discount of 3% if they pay on or before 90 days?

Allan has urged for a rethink of the Prompt Payment Code, to prevent situations like this occurring. He continued: “The main argument 2 Sisters make in their defence appears to be that these unfair payment terms are only a negotiating position and that, anyway, everyone else is doing it. This is a poor defence at best, and misses the point that small firms do not have the power or resources to reject such unfair terms, nor to get recompense when the terms are breached.

“This is why we are calling for the Prompt Payment Code to be strengthened. All firms should be on a fairer footing when negotiating payment terms, and it’s vital we outlaw unreasonable terms and conditions being imposed on suppliers.”