Boots the chemist exploiting smaller firms

July 23, 2008

The retailer and chemist chain Alliance Boots have been accused of exploiting smaller firms to benefit their cash flow.

Boots have written to suppliers telling then that invoices will be paid up to 75 days from the end of the invoice month instead of 30 days previously. The company also decided to start charging a 2.5% “settlement fee”, which is effectively a charge for paying the bill.

Boots merged with Alliance Unichem in 2006 and they have said the steps have been taken to bring Boots in line with Alliance Unichem policies. The company Alliance Boots was bought by private equity firm Kohlberg Kravis Roberts for £11bn in 2007.

In a statement the company said “We are committed to working with our suppliers for our mutual long-term benefit. Our procurement strategies are in line with other groups of similar size and scale.”

However the Federation of Small Business (FSB) criticised the policy. John Wright, FSB national chairman said “Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result. Making small businesses wait 105 days for payment and charging them for the privilege of doing so is nothing short of outrageous.”

Justine Thompson the director of MTA International, a supplier of management training resources, received a letter from Boots. “If all the big companies that we deal with treated me in the same way I’d soon be out of business,” she said.

Merchant News Syndication

Boots the chemist exploiting smaller firms

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