By Daniel Hunter

B&Q is facing allegations of making 'pay-to-stay' threats to its suppliers, according to a report by The Times (Paywall).

The DIY retailer, which is a signatory of the Prompt Payment Code, is understood to have demanded hundreds of thousands of pounds for an "investment-for-growth" programme. Suppliers, often small businesses, were threatened that their contract with B&Q may be cancelled without the payment.

The Times said some suppliers had been asked for as much as a tenth of their turnover. And one described it "massively underhand cash grab".

B&Q is understood to have described the requests as allowing it to discount products and for the suppliers to "share in their growth".

John Allan, National Chairman of the Federation of Small Businesses (FSB), said: “If B&Q abused its supply chain as reports show, it marks the first major test for the newly strengthened Prompt Payment Code and asks whether it now has the necessary teeth to do its job.

"To get to the bottom of what has gone on, we want these allegations investigated thoroughly and with urgency. Should they prove to be true, B&Q and its parent company Kingfisher simply cannot be allowed to remain on the Code. Most people in the UK expect to be paid within 30 days of completing their work, so it’s only fair that businesses should receive the same terms as standard.

"Forms of supply chain bullying such as the ‘pay-to-stay’ tactics B&Q is reported to employ should be made illegal because of the devastating effect they can have on small firms. We’ve seen too many instances of businesses being effectively bullied into longer payment terms or unfair contracts which cripple their cashflow, and have led to business failures and job losses."

We are currently awaiting response from B&Q.