The UK’s largest clothing retailer Marks and Spencer (M&S) has confirmed to just-style that it plans to change its current monthly pay cycle for general merchandise suppliers, in a move that will see a longer delay in payments.
Under new plans, M&S payment terms will move from 30 days to 60 days for its Freight On Board (FOB) suppliers from 1 September, while its Full Service vendors (FSV) will change from a 4 week payment cycle to a 5 week payment cycle from 1 December.
A spokesperson for the company said: “Following a full audit of our general merchandise payment terms, we are extending these terms to bring us in line with industry standards, and aligning them so that we can have greater parity across our supply base.”
The retailer says the key difference between the two types of suppliers is the point at which it takes ownership of the goods.
Full Service vendors, which pass ownership of stock to retailers when it moves into warehouses or stores, comprise 55% of M&S’ general merchandise supply. FOB vendors, which pass on ownership when stock is loaded onto the ship, supply the rest.
M&S uses a total of 86 general merchandise suppliers, who will now be paid less often. But M&S said the new terms fit within wider industry payment periods of 30 to 160 days.
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By GlobalDataMeanwhile, the company is offering suppliers a new financing scheme in conjunction with the RBS and HSBC banks that means they are paid immediately after their invoices have been approved by M&S. This is normally around seven days from invoice receipt.
“We are extending our current vendor financing scheme, which offers our suppliers the ability to improve their cash flow,” the spokesperson said.
