Payments Policy and Procedure

 

Overview

 

This policy and procedure applies to payments by Coles Supermarkets, Coles Express and Coles Liquor (Coles) for goods for resale.

The Food and Grocery Code of Conduct (Grocery Code) which applies to Supermarkets and Express outlets, outlines some specific requirements in relation to payments. Under the Grocery Code Coles must pay its suppliers within a reasonable timeframe of receiving the suppliers’ invoices.

Coles is also a signatory to the Business Council of Australia, Australian Supplier Payment Code (BCA Code) which requires (amongst other things) Coles to pay suppliers on time following receipt of a correct invoice and receipt of correct Goods.

Coles will use its best endeavours to pay all invoices on time. Receipt of paper invoices from suppliers can make it difficult to meet some payment periods. All suppliers are encouraged to implement electronic invoicing to ensure that Coles can meet agreed payment terms.

 

Paying Suppliers’ Invoices

 

The payment terms agreed with suppliers are set out in the Trading Terms agreement. Coles has an obligation to pay its suppliers within the timeframe set out in the Trading Terms agreement.

 

Coles’ payment terms are:

 

  (a)   Standard Payment Terms

 

Term Name	Invoice Maturity  (calculated as days  from receipt of  Goods by Coles DC or Store#)	Payment Frequency*(Due Invoices)	Payment Cycle		Example of Payment Terms
			Min. payment cycle (days)	Max. payment cycle (days)	Invoice date	Due date	Payment date
Daily	7	Daily	8	9	6 Jan 2020	13 Jan 2020	14 Jan 2020
Daily – 2020  SS Scheme	30	Daily	30	32	8 Mar 2020	1 Apr 2020	1 Apr 2020
Weekly	12	Weekly, Monday	13	20	7 Mar 2020	19 Mar 2020	23 Mar 2020
Fortnightly	19	Fortnightly,    Monday	20	34	2 Apr 2020	21 Apr 2020	4 May 2020
Monthly	End of next month	1st business day of calendar month	31	63	8 Mar 2020	30 Apr 2020	1 May 2020
Bi-Monthly	End of next two     months	1st business day of   calendar month	61	92	8 Mar 2020	31 May 2020	1 Jun 2020
Overseas	90 days FOB	Monday	91	98	1 Mar 2020	30 May 2020	1 Jun 2020

 

*   Where the payment day falls on a Saturday or a Sunday or a public holiday in Melbourne (Australia), payment will be processed by Coles on the next business day.

 

#   Where Goods are collected by Coles Collect, receipt for invoicing purposes, occurs when the Goods are received at the Coles DC.

 

Examples, where the agreed terms are:
 

• standard monthly, each delivery of Goods received in the month of June will be paid on first business day of August; and

•  

• standard weekly, invoices are aged at least 12 days from each delivery of Goods received and will be paid on the Monday following maturity.

 

  (b)   Non-standard Payment Terms

 

In certain limited circumstances, Coles and suppliers may have agreed non-standard days for payment days, being the number of days elapsed from the date of receipt of Goods by Coles to be paid in accordance with standard payment frequency.

 

Example:

• Payment Terms: Payment Days/Invoice maturity: 20 days
• Payment Frequency: Weekly

Invoices will be aged 20 days from receipt of Goods and will be paid in the next weekly cycle on the Monday following maturity.

 

 

Small Suppliers

 

Details of the Small Supplier Payment Schemes are set out in Appendix A to this Policy. These policies may be reviewed from time to time.

Since 1 July 2017 Coles Supermarkets and Coles Express have had in place a Small Supplier Payment Policy – see Part 2 of Appendix A (2017 SS Scheme). All suppliers covered by that Policy will continue to receive the benefits of that Policy until they no longer qualify.

From 1 July 2020 the 2017 SS Scheme will be replaced with a new Policy which is in line with the BCA Code – see Part 1 of Appendix A (2020 SS Scheme).

Payment Terms Matrix:

 

If prior to 1 July 2020:	Then after 1 July 2020:
1. Negotiated Payments Terms specified in your Trading Terms agreements result in payment in less than 14 days	No changes will be applied to the Payment Terms specified in your Trading Terms agreement.
2. You are a current member of the 2017 SS Scheme and are paid in 14 days	You will continue to be paid in accordance with the 2017 SS Scheme, while eligible.
3. Negotiated Payments Terms specified in Trading Terms agreements result in payment in less than 30 days	No changes will be applied to the Payment Terms specified in your Trading Terms agreement.
4. Negotiated Payments Terms specified in your Trading Terms agreements result in payment in more than 30 days and you: (a) qualify as a Small Supplier under 2020 SS Scheme (b) do not qualify as a Small Supplier under 2020 SS Scheme	You will be paid in accordance with the 2020 SS Scheme, while eligible. No changes will be applied to the Payment Terms specified in your Trading Terms agreement.

 

Queries on Supplier Invoices

 

If you have invoices outstanding beyond the payment period outlined above, you can raise a query with Coles accounts team by emailing:

      accounts.investigation@coles.com.au

You should also notify your Category Manager of your accounts query.

Claiming other payments from our suppliers

 

Coles does not ask for payments from suppliers unless these have been discussed and agreed with suppliers. Any agreement for payments must also be documented in writing between Coles and its suppliers.

Coles team members have been directed to ensure all payments agreed with suppliers have regard to the likely benefit to the supplier as well as Coles and the cost borne by or contribution made by Coles.

Aligned to the Grocery Code, Coles does not require payments from suppliers for shrinkage. We may ask our suppliers to plan and problem solve around the causes of shrinkage, such as changes that could be made to packaging to help stem losses. We will not impose costs for changes such as re-packaging without consultation and mutual agreement.

Only in certain circumstances will Coles ‘set off’ an amount on a supplier’s invoice prior to its payment by Coles. Setting off means reducing the amount due to the supplier in respect of matured invoices. Coles will seek prior supplier approval for setting off:

• straight monies;

•  

• any claim provided for under a More for More Agreement, Joint Business Plan or other related agreements in writing;

•  

• any claim in accordance with Coles Recall & Withdrawal guidelines; and

•  

• any other amounts agreed with the supplier in writing.

 

However, Coles may (without obtaining further approval from the supplier) also set off amounts which are set out in specific agreements in writing. For example:
 

• the amount of the rebates and settlement discount (if any) set out in your Trading Terms (as accumulated percentage classified as settlement discount, but covers all agreed rebates) as a percentage of the gross invoice value;

•  

• where any Goods are subject to payment of levies and charges under the Primary Industry Levies & Charges Collection Act 1991 and Regulations;

•  

• in accordance with your Trading Terms agreement, Waste & Markdown Agreement or Terms and Conditions such as for:
  • short deliveries;
  •  
  • rejected goods;
  •  
  • cost discrepancies;
  •  
  • waste claims;
  •  
  • markdown claims;and
  •  
  • manual volume rebates which do not relate to all Goods, but certain items, or sub-categories or categories only;
•  
• where we have made specific agreements with you in writing such as for:
  • promotional funding;
  •  
  • freight recovery;
  •  
  • transport claims (e.g. Coles Collect at agreed pallet rate); or
  •  
  • artwork costs in respect of Coles Brand Goods (for Coles Brand suppliers, refer to your Coles Brand Goods Statement or the Rate Card of the Coles Supplier Portal for indicative costs); or
• under the Coles Nurture Fund Funding Agreements, for repayment of any loans provided.

Coles will raise the claims on the first Monday following the claim being due or agreed with the supplier and the claim will be deducted from the next remittance payable after the claim has been raised. E.g. promotional funding agreed in a PAF will be raised on the first Monday following the promotion end date, and will be deducted from the next remittance payable after the claim has been raised.

 

Consistent with the Grocery Code, Coles does not request payments from suppliers for buyers’ visits to suppliers, consumer market research, opening and refurbishment of a store or hospitality enjoyed by our Coles Team Members.

 

Time restrictions on claims

 

Coles does not make claims of suppliers nor pay claims from suppliers that are more than two years old from the transaction date.

 

Disputes

 

Where there are disputes on claims, Coles and suppliers will actively work together to resolve any outstanding claims in a timely fashion including carrying out the necessary investigations to provide evidence to support or deny any disputes.

 

If at any time Coles disputes the amount of an invoice, Coles will pay any undisputed amount but is not required to pay the disputed amount until the dispute is resolved.

 

 

Appendix A – Payment Terms for Small Suppliers

 

Part 1 New Policy from 1 July 2020 for all suppliers of Goods for Resale to Coles (2020 SS Scheme)

 

1. Who is eligible to be a small supplier for the purposes of this Policy?

    

   Any supplier of goods for resale to Coles that meets the following conditions:

    

   (a)    the supplier has registered for an Australian Business Number on the Australian Business Register;

    

   (b)    the supplier and its related bodies corporate (as defined in Corporations Act 2001) (if any) together have an annual turnover   of up to $10 million;

    

   (c)   the supplier is not a subsidiary (as defined in Corporations Act 2001), of an overseas corporation;

    

   (d)   the supplier has registered with coles.earlytrade.com and Earlytrade Verify has confirmed that the supplier meets the   requirements under paragraphs (a), (b) and (c); and;

    

   (e)   the supplier’s current payment terms with Coles result in payment being more than 30 days from delivery of goods for resale,

   (Small Supplier).

    

2. Commencement Date

    

   For all goods for resale delivered by a Small Supplier to Coles after 1 July 2020, whilst eligible.




3. Payment Terms for Small Suppliers

    

   Subject to receipt of an invoice including the correct price and quantity matching the Order, the Small Supplier will be paid for all goods for resale delivered by it to Coles 30 days following receipt of the Goods or invoice (whichever is the later) (SS Payment Terms).

    

   For clarity, if an invoice falls due for payment on a Saturday or a Sunday or a public holiday in Melbourne (Australia), payment will be processed by Coles on the next business day.

    



4. Registering to be a Small Supplier

    

   A supplier which at any time considers it qualifies as a Small Supplier will be required to register with coles.earlytrade.com to validate it is a Small Supplier for a 12 month term. The SS Payment Terms will commence within 7 business days of its eligibility being verified or 1 July 2020 whichever is the later. The date the supplier’s eligibility is confirmed will become the supplier’s anniversary date. For clarity, the payment terms set out in the supplier’s current Trading Terms agreement will apply until a supplier has been validated as a Small Supplier.




5. Annual Review

    

   A supplier’s eligibility to continue as a Small Supplier will be reviewed at the supplier’s anniversary date (being the date the supplier’s eligibility is verified). Suppliers will be required to update their Earlytrade Verify records to substantiate that they continue to meet the Small Supplier qualifications set out in paragraph 1 above. Any supplier which no longer meets the requirements will be advised that its payment terms will revert to those specified in its Trading Terms agreement within 4 weeks from notification.

   
   

   If a supplier does not update its records with Earlytrade Verify within 4 weeks of its anniversary date, its payment terms will revert to those specified in its Trading Terms agreement.

Part 2 Small Supplier Policy 1 July 2017 to 30 June 2020 for suppliers of Goods for Resale to Coles Supermarkets and Coles Express (2017 SS Scheme)

 

1. Any supplier that is currently qualified as a small supplier under the Small Supplier Policy scheme that operated from 1 July 2017 will continue to receive the benefit of that Scheme until it no longer meets the requirements of a small supplier under that Scheme set out in paragraph 2 below. For avoidance of doubt, once a supplier no longer meets the requirements, it will no longer qualify under the Scheme in the future, even if it meets the requirements in the future. In addition, no further suppliers will be added to this Scheme.

    



2. These requirements are:

    

   1. supplies or is estimated to supply in a 12 month period 1 April to 31 March less than $1 million in value of goods for resale;

   2. its current payment terms result in payment more than 14 days from delivery of goods for resale;

   3. is on electronic invoicing (i.e. eCommerce); and

   4. is not an overseas supplier on FOB or ex-works delivery terms.




3. When determining the value of the goods for resale, Coles will:

    

   1. look at the amounts paid by Coles to the supplier for the goods for resale (including GST) and for avoidance of doubt is the amount paid after deduction by Coles of all amounts owing to Coles from the remittance;

   2. total the amount paid by Coles to the supplier for goods for resale in the period 1 April to 31 March; and

   3. group together all goods for resale supplied by:
      (i) each Vendor Number allocated to the same ABN; and
      (ii) each related bodies corporate.

4. Any supplier where in the 12 month period 1 April to 31 March Coles has paid it more than $1.2 million for goods for resale will be advised that its payment terms will revert to those specified in its Trading Terms agreement from 1 July, but the Supplier may be eligible as a Small Supplier under the 2020 Policy referred to in Part 1 above.