By Jessica Lim

SUPERMARKET giant NTUC FairPrice will pay 500 of its suppliers sooner as part of a scheme to ease the cash flow of these small companies.

Where it used to pay these small and medium-sized enterprises (SMEs) 60 days after the delivery of supplies, it will now do so in half that time.

FairPrice announced in January that it had launched a $15 million package designed to help its suppliers, customers and needy workers. It said at the time that it would reach out to 100 SMEs.

Following feedback from its suppliers on how helpful the programme was, the supermarket chain has decided to cast its net wider because 'ultimately, we want to help them overcome this downturn', said its director of integrated purchasing, Mr Tng Ah Yiam.

So far, 283 suppliers have taken up the offer. The supermarket giant expects 500 of them - making up about a third of its pool of suppliers - to take up the offer over the next few months.

The scheme will cost the cooperative about $2 million in interest that it might otherwise have earned from investments this year.

FairPrice will put aside $30 million for the initiative - funds that could have been ploughed into other investments.

Besides paying its suppliers earlier, FairPrice will also give them discounts on listing fees and advertisements, and help them promote Singapore-made products.

Singapore Polytechnic retail management lecturer Sarah Lim said this programme was 'important in these times' because a supplier would need deep pockets to sustain a business as it waited for payment.

'Quick payment also means a small company is less dependent on loans and it allows it to buy more goods faster without having to wait for payment,' she said.

'It really helps with the money cycle.'

Mr Ng Chin Nyan, the 49-year-old director of Sing Long Foodstuff Trading, knows that being paid sooner makes his business more nimble because he does not need to 'drag things'.

The 26-year-old company supplies FairPrice with about $300,000 in food items, including noodles and sauces, every month.

Said Mr Ng: 'In the past, we wanted to bring in new items but did not because we had to wait for payment.'

Being paid sooner means the company will be able to do so, as well as pay its suppliers and workers sooner.

Mr Ng cited another perk: 'It also means we can repay bank loans faster and incur less interest.'

For frozen-snack supplier As-Sufi Islamic Food Industries, FairPrice's move will put more money in the business' reserves.

Its owner, Mr A. Rahman Abduh, 47, now runs two factories - one in Malaysia and the other in Singapore.

Noting that business had dipped 2 per cent in the last six months, he said: 'This is so helpful. All of it will go into our cash reserves.

'This is important now. Who knows what will happen in the future? If sales drop drastically, then we can dip into these funds to keep production going.'

Others, though satisfied, are hoping that all major supermarkets will do the same thing.

Mr Randy Goh, director of Sinhua Hock Kee Trading, said that should other supermarkets follow FairPrice's move, 'the amount will then be much bigger and we can reinvest it'.

He added: 'Now, it helps only minimally.'

Sinhua supplies $250,000 worth of foods, ranging from sauces, tea and noodles to preserved fruit, to FairPrice every month. This makes up only 10 per cent of its business.

A Straits Times check with other major supermarket chains shows that most do not have a similar scheme in place.

A Sheng Siong spokesman said it was leaving arrangements with its suppliers 'as per normal' and that it had been 'paying suppliers on time'.

This article was first published in The Straits Times.