One of Australia’s peak small business groups has praised Coles boss John Durkan after reports the supermarket giant is moving to more straightforward invoicing, but the complexities of payment arrangements between big business and small suppliers remain in the spotlight.
The Australian reports that after a pilot program, Coles is rolling out a simplified invoicing scheme similar to that used by Aldi. The new invoices will show the “net price” of products by separating out this final price from any discounts or rebates involved in the transaction and removing confusion or any potential backwards-and-forwards conversations about the final price before suppliers actually get paid.
“We believe moving to net price will provide mutual benefit … including reducing unnecessary complexity in our discussions, and removing some of the administrative burden (e.g. reduced invoice matching) associated with having complex arrangements,” the supermarket said in an letter to suppliers, according to The Australian.
Communication between big business and smaller operators over payment terms and times has stayed front of mind this week, with Australian Small Business and Family Enterprise Ombudsman Kate Carnell telling SmartCompany it’s up to SMEs to review the costs of doing business with big companies due to the complexities around their payment policies.
“Have a look at the total cost of doing business — this has to take into account the payment terms, and potentially the cost of capital you might need to be able to deal with these people,” she said on Wednesday.
The move towards simplified invoices comes just weeks after Coles also pledged to pay smaller suppliers within 14 days, and Council of Small Business Australia chief executive Peter Strong says at this point, managing director John Durkan looks to be trying to make things easy for smaller players that work with the supermarket.
“Given their recent announcement on payments, and given what they’re doing here, good on them,” Strong says.
“He [Durkan] is certainly trying to turn the culture around, and Coles has every opportunity to do so — for one, they’re huge.”
The Australian reports the invoice move also brings Coles closer to Aldi’s invoicing model, and the 2016 Australian Retailer of the Year has previously spoken about the importance of treating its supplier base fairly.
“We understand the importance of developing fair and equitable relationships with our suppliers,” the discount supermarket chain says in its callout for new members of its supplier network.
Meanwhile, numbers out from a UBS survey of supermarket shoppers this week suggest Aldi’s momentum may be slowing as it expands across the country, but analysts believe the rollout of new format stores along the east coast could reinvigorate it, reports news.com.au.
The discount grocery chain unveiled its first significant rebrand in decades last month, and will reportedly open 25 of its new format stores, which include more fresh and health food options, along the east coast this year, according to Fairfax.
SmartCompany contacted Coles for further comment on the new invoicing arrangements but a spokesperson said the supermarket has nothing further to add.