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Suppliers taking up Debenhams' early payments scheme "significant", says finance director

Debenhams has said the number of its suppliers taking up a new scheme, which offers them early payment on orders in return for a discount, has become “significant”.

The department store, which posted strong Christmas trading earlier this week, has been offering suppliers early payment to help their cashflow in return for discounted invoices as a formal scheme for the last six months, according to outgoing finance director Chris Woodhouse.

He explained that suppliers can request early payment via Debenhams’ banks, but that an interest rate is applicable which suppliers must cover with a discount off their invoices. This, however, is lower than the interest they would get charged for a cash advance from banks elsewhere.

“We all know it’s not easy for small businesses with banks pulling in their horns. We thought, ‘what can we do to help them?’ Increasingly, we’ve had a material number of suppliers take up the scheme. It’s now significant. As suppliers’ arrangements come up for renewal, we expect more will come into the scheme,” Woodhouse said.

The present scheme has grown out of an auction-style initiative introduced last May, whereby suppliers bid against one another on discounts in return for early payment.

Readers' comments (5)

  • In that it is suggested that suppliers can request early payment via the banks that supply credit to Debenhams but that the effective discount will be at rate equal to the aanual interest rate that is charged to Debenhams by its Bankers, it is reasonable to conclude that the discount received by a supplier will be equal to a maximum of 4.00% per annum which, over a 60 day credit period, will equate to 0.69% - not such a great discount compared to the 3.00%/4/00% early payment discount granted to retailers by many manufacturers who pay within 10 days of invoice date. Comments on this pont would be appreciated, particularly from anyone using the "Debenhams Early Payment Discount Scheme" and/or Mr. Chris Woodhouse, the Finance Director at Debenhams.

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  • Unfortunately most indies do not have this type of luxury and often have to pay for their stock with many brands/suppliers in advance before it will be even delivered in return for nothing.

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  • Forget 60 days payment, many suppliers have had 120 days forced on to them, this is based on receipt of invoice so in reality it works out more like 140 days, hardly surprising that suppliers have taken up the scheme. The part that makes really gauls is the cynical way that it was offered and then dressed up as "what can we do to help suppliers", if they had really wanted to help suppliers then they could have simply said for an extra 1% discount we will now pay suppliers 60 days early or an extra 0.5% 30 days early, on a first come first serve basis, instead they asked for bids there by further financing their stratedgy of discount retailin, which is what these days seems to be driving the Debs business.

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  • Debenhams should be paying their suppliers on time full stop. They have extended their terms to such an extent that it has become ridiculous. All they are doing now is offering marginally less worse terms to the supplier and expecting them to be grateful! The only people Debenhams are helping are themselves.

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  • fob terms, 7.5% for 120 days (if your lucky) add to this a retrospective discount they take on a sliding scale depending on turn over, add to this "if you need help" an extra 3% for early payment, thank god they are helping their suppliers, god knows what they would be otherwise ! Margin by stealth. Does anyone know of worse terms on the high street ?

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