Asda has launched a programme leveraging its credit to provide working capital to suppliers in the face of the cost-of-living crisis.
The supplier finance programme will provide early funding on invoices, helping suppliers improve cash flow against challenging macroeconomic conditions.
The programme allows suppliers to access up to 100% of the value of their invoices upon approval, leveraging Asda’s credit rating to access an off-balance sheet source of working capital.
The lead funder, Lloyds Bank, will operate the programme through its open account platform, which allows suppliers to join in 48 hours or less.
The programme will help a range of suppliers in the UK across various sectors including food and drink.
Asda’s present supply chain support initiatives include Asda Nurture, which gives innovative small and medium-sized suppliers more accessible shelf space in its stores.
Stephen Finn, senior director for tax and treasury at Asda, said: “Our supplier relationships are an essential part of our offering to customers and, as one of the country’s largest grocers, we have a responsibility to support food and drink producers across the UK and beyond.
“This new, expanded supplier finance programme we are delivering with Lloyds Bank deepens our support for the businesses we rely on while helping us to build resilience in our supply chain.”
Mansour Davarian, managing director and head of corporate trade finance and working capital sales at Lloyds Bank, said: “Retail and food and drink are just two sectors that have struggled with delivery delays and liquidity challenges since the start of the pandemic, and now they are facing into a high-inflation environment where consumer confidence is low.
“Supply chain finance programmes, like the one Asda launched, build resilience, improve cash flow, reduce cost and risk and, with the right technology, offer a seamless, user-friendly experience to all parties involved – all helping British businesses prosper.”
Asda’s move comes at a time of strained retailer-supplier relations, with inflation continuing to contribute to a challenging trading environment.
Last week, Tesco chair John Allan accused suppliers of using inflation as an excuse to unnecessarily drive up prices, adding to the tension between grocers and suppliers.
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