Supermarkets are playing their part to keep their suppliers in good standing during the COVID-19 pandemic, reports Creditsafe, a provider of company credit reports, which is finding that suppliers to this industry are now paid faster today than for the same period one year ago.
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. 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 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 Supermarkets, Stop & Shop, Trader Joe’s and Winco. Also, more and more chains are ensuring that suppliers were paid on time or early.
Reviewing this latest data, Creditsafe CEO Matthew Debbage was quick to applaud the grocery chains for leading by example during this time. “It’s fantastic to see these big household names stepping up to the plate,” he said. “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. 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. By doing so, they are helping those businesses pay their suppliers, keep staff on the payroll and boost the wider economy.”
“We are very encouraged to see the recent announcement from Walmart.” Debbage continued, “To see they are committed to promptly paying their suppliers and with data from our analytics show that not only are they making good on that commitment, but it’s a trend evident in the whole industry. It’s amazing news not just for the suppliers but in the way this ripples through the wider community, and we want to applaud these companies for playing their part in relieving stress on the US economy.”
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. “While this and similar data all contribute to our wider understanding of the current situation, this particular movement just stood out for us, and we are delighted to be able to share it,” he added.