Fonterra is being praised for backtracking on a controversial payment term policy.
Concerns were raised last year when the dairy giant told around 3600 suppliers they would have to wait up to 60 days for payment.
However, minister for small business Stuart Nash was the first to congratulate Fonterra on ditching the policy announcing the news on Tuesday.
The dairy co-operative has adopted a new policy where suppliers whose contracts are worth up to $300,000 per annum will be paid on the 20th of the following month.
“I expressed concerns earlier this year about the tough payment terms faced by some small and medium businesses, after reports some were waiting up to three months for payment.
“I also raised this directly with Fonterra. The company has now advised that from 1 August it will change its payment terms for smaller suppliers, who make up around 86 per cent of its vendors.
“I commend Fonterra for the change, which will affect more than 4,000 suppliers,” Nash says.
Road Transport Forum chief executive Ken Shirley also acknowledges the action taken by Fonterra to reduce its payment times to small and medium suppliers and contractors.
“Fonterra’s previous policy was blatantly unfair to these smaller businesses and was really just using them as a cheap form of finance.
“It was quite an outrageous practice and we are pleased that they have dropped it.
“It is good to see Fonterra bucking the growing international trend for large companies to extend payment times. Over the last few years and on both sides of the Tasman there have been a number of examples of larger companies using this kind of corporate bullying to their own advantage and to the detriment of small businesses that depend on them,” Shirley says.
The Road Transport Forum has been working on a legislative solution to the issue of deferred payments and will be meeting with small business minister Stuart Nash over the next few weeks.
