Study: Grocery chains paying suppliers faster during COVID-19 pandemic
Large grocery chains are taking a lead in getting bills paid and supporting their suppliers.
That’s according to Creditsafe, a leading supplier of company credit reports, which said that suppliers to the grocery industry are being paid faster today than for the same year-ago period, with late payment delays down by nearly 50%.
Traditionally, companies have tended to keep hold of their money in tough times, and it has become commonplace to see businesses deferring payments to suppliers, according to the company. However, Creditsafe's analysis has shown that grocery chains are leading the way in improving payment speed.
DBT or 'Days beyond Terms' is a metric used by commercial credit reference agencies to evaluate a company's payment behavior. A recent analysis by Creditsafe on millions of transactions shows an improvement from five days DBT to a figure below three, with that trend continuing to accelerate.
The average DBT across the supermarket sector has almost halved from last year with significant shifts from the likes of Publix, Stop & Shop, Trader Joe's, and Winco, according to Creditsafe. Also, more and more chains are ensuring that suppliers were paid on time or early.
"While these big businesses have seen a cash boost from the buying surge of recent weeks, they have put this to good use by making sure their smaller suppliers are getting paid on time,” said Creditsafe CEO Matthew Debbage “They are literally putting much-needed cash into the hands of tens of thousands of often-small businesses, across a wide range of sectors, not just food suppliers, but also, for example, the trucking and logistics companies that keep grocery shelves stocked.”
Debbage added that the company was very encouraged to see the recent announcement from Walmart. (The retail giant announced in late March an initiative to get payments to suppliers faster, adding resources to speed things up and eliminate eligibility requirements that could hinder companies.)
"To see they are committed to promptly paying their suppliers, and with data from our analytics showing that not only are they making good on that commitment, but it's a trend evident in the whole industry,” he added.
Debbage revealed that the payment improvement discovery became obvious during Creditsafe's recent industry assessment into the impact of the COVID-19 pandemic on US businesses. The new COVID-19 Impact Score, which gauges the potential impact the current situation will have on individual companies and when used alongside the company's core credit score, will help business owners and other finance professionals make better business decisions.