Regarding payment to suppliers, all Companies have set terms and in line with industry practice and considering the financial sustainability of the respective supply chains. In addition, there are specific programmes targeting smaller suppliers as detailed below.
In the three countries of our food distribution operations (Portugal, Poland and Colombia), which account for more than 99% of the Group’s sales, we have specific tools in place to ensure an efficient invoice processing. These tools manage and ensure our compliance with the payment terms and conditions agreed with each supplier, namely: i) electronic communication (EDI) for receiving suppliers’ invoices and related documents; ii) a web portal where suppliers have access to information, including the list of invoices to be paid, with notifications in cases where clarifications or actions are required so corrections and/or adjustments may be done promptly to facilitate the payment process.
To help improving the treasury management of smaller food distribution suppliers we have strengthened our supplier finance arrangements. These arrangements enable suppliers to anticipate the receipt of their invoices at competitive cost without affecting their debt rating. By the end of 2024, these programmes were in place in Portugal, Poland and Colombia, covering more than 200 suppliers in each country.
Our food distribution companies also have specific programmes that promote shorter payment terms for smaller suppliers.
In Poland, since the Covid pandemic in 2020, Biedronka has reduced the payment terms to a maximum of 21 days for producers with an annual turnover of less than 100 million złoty (approximately 24 million euros). In 2024, around 260 suppliers benefitted from this initiative, 60 more than in 2023.
In Portugal, there are two programmes in place. The first aims to support small and medium-sized producers that are members of the Confederation of Portuguese Farmers (CAP). This measure, granted under exceptional circumstances, is unique in Portuguese retail and aims to bring forward payment to an average of 10 days, instead of the 30 days established by law for these categories, without any financial costs to the producer. Since 2012, around 375 suppliers have benefited from this initiative. The second programme establishes a maximum payment term of 30 days for all Portuguese small and medium-sized enterprises certified by IAPMEI, the Public Agency for Competitiveness and Innovation. In 2024, all Pingo Doce and Recheio’s suppliers identified as certified Portuguese SMEs benefitted from this initiative.
In Colombia, Ara has in place the “Plazos Justos” (Fair Deadlines) programme to shorten the payment terms for smaller suppliers. This initiative targets micro, small and medium-sized enterprises and ensures payment in less than 45 days, with the aim of boosting their cash flow and business productivity. In 2024, approximately 1,170 suppliers participated in this programme.
As previously referred, in addition to our SME-specific payment programmes, our payment terms are agreed with all trade suppliers and set on a General Supply Agreement. These terms may vary depending on type and size of the supplier and/or the category of products supplied. As an example, suppliers of fresh products have shorter payment terms than suppliers of non-food products with low rotation.
Payment terms are set in three categories: i) less than 30 days, ii) between 30 to 60 days, and iii) more than 60 days. In all countries where we operate, most trade suppliers – more than two thirds – are paid between 30 and 60 days (equivalent to 72% of the responsibilities). Information related to the proportion of suppliers’ responsibilities being paid according to average number of days is included in note 28.2.2. “Liquidity Risk”.
Payments outside this range may apply to specific agreements with suppliers (e.g., as mentioned previously) or in cases where additional information may be needed before payment can be made (e.g., obtain confirmation of supplier’s new bank accounts).
During 2024, our Companies have not been involved in legal proceedings related to late payments to trade suppliers.