Finance Gazette analysis of eight major UK-listed companies finds supplier-finance programmes running into billions, with finance providers already paying between roughly half and nine-tenths of disclosed balances to suppliers.
Supplier finance rarely receives the same attention as profit, free cash flow or net debt. Yet for some of Britain's largest listed businesses, the sums involved are substantial.
The Finance Gazette Supplier Finance Review 2026 examined the latest financial disclosures from Tesco plc, Unilever PLC, Diageo plc, Compass Group PLC, Associated British Foods plc, Coca-Cola Europacific Partners plc, Rolls-Royce Holdings plc and Marks and Spencer Group plc.
Across the seven companies for which Finance Gazette could make a free-cash-flow comparison, year-end supplier-finance balances were equivalent to approximately 19% to 61% of annual company-reported free cash flow.
Supplier participation was also substantial. Across all eight companies, finance providers had already paid suppliers amounts equivalent to approximately 50% to 89% of the disclosed supplier-finance balances.
Marks & Spencer disclosed that supplier-finance liabilities represented 37% of its trade payables. At Compass Group, Finance Gazette calculates the equivalent figure at approximately 31%.
None of those figures establishes that the liabilities are hidden borrowing. In most of the arrangements examined, suppliers decide whether to obtain early payment while the purchasing company continues to settle the underlying invoice according to its normal contractual terms.
What the figures reveal instead is a material part of corporate working capital that can be easy to overlook when financial analysis concentrates on headline borrowings, net debt and cash generation. A similar issue arises with long-term provisions: Finance Gazette’s analysis of decommissioning liabilities at UK-listed energy groups shows how accounting movements, acquisitions and asset sales can materially alter a liability independently of cash expenditure.
| Company | Supplier finance | Funded | YoY | SF / FCF |
|---|---|---|---|---|
| Tesco | £1.172bn | 64.7% | -5.9% | 59.9% |
| Unilever | €2.665bn | 77.5% | +20.8% | 45.0% |
| Diageo | $1.092bn | 71.8% | +8.5% | 34.0% |
| Compass | $1.205bn | 82.9% | n/a | 61.0% |
| ABF | £125m | 50.4% | +38.9% | 19.3% |
| CCEP | €689m | 89.1% | -9.8% | 37.5% |
| Rolls-Royce | £646m | 83.0% | +8.8% | 19.8% |
| M&S | £395.8m | 88.6% | +9.9% | — |
Compass used transitional relief available under the amended supplier-finance disclosure requirements and did not provide directly comparable prior-year information in the same format.
Source: Finance Gazette analysis of company annual reports, financial statements and results. Percentage calculations are by Finance Gazette.
The FCF comparison is designed to provide context for scale rather than rank the companies by financial risk. Free cash flow is not defined identically by every business: Compass uses underlying FCF and CCEP comparable FCF, for example.
It also compares a point-in-time balance-sheet amount with cash generated over a full financial year. A 60% ratio does not mean supplier finance generated 60% of FCF.
The timing of the analysis matters.
Amendments to IAS 7 and IFRS 7 introduced additional disclosure requirements for supplier-finance arrangements for annual reporting periods beginning on or after 1 January 2024.
The requirements are designed to give users better information about the effect of supplier finance on a company's liabilities, cash flows and exposure to liquidity risk.
Among the required information are the carrying amounts of liabilities within supplier-finance arrangements, amounts for which suppliers have already received payment from finance providers and payment-date ranges for supplier-financed liabilities and comparable trade payables.
The Financial Reporting Council subsequently reviewed supplier-finance disclosures at 10 UK companies to assess how the new requirements were being applied in practice.
That additional disclosure makes it increasingly possible to look beyond whether a company simply has a programme and examine how the programme is actually being used.
The amount of a supplier-finance balance tells only part of the story. A second question is how much of it suppliers have actually chosen to fund.
Across the eight companies, the proportions were:
| Company | Share already funded to suppliers |
|---|---|
| Coca-Cola Europacific Partners | 89.1% |
| Marks & Spencer | 88.6% |
| Rolls-Royce | 83.0% |
| Compass Group | 82.9% |
| Unilever | 77.5% |
| Diageo | 71.8% |
| Tesco | 64.7% |
| Associated British Foods | 50.4% |
At CCEP, finance providers had already paid suppliers €614 million against a €689 million balance. Marks & Spencer was close behind, with £350.5 million funded against £395.8 million, while suppliers had drawn £536 million from the £646 million within Rolls-Royce's arrangements.
This distinction between the carrying amount and the amount already funded becomes important later in the analysis, because the two do not always move in the same direction.
Marks and Spencer Group plc provides one of the clearest illustrations of the scale supplier finance can reach within a company's payables.
At 28 March 2026, M&S reported £395.8 million subject to supplier-finance arrangements, compared with £360.3 million a year earlier — an increase of approximately 9.9%.
Finance providers had already paid suppliers £350.5 million, equivalent to approximately 88.6% of the balance.
More significantly, M&S disclosed that supplier-finance liabilities represented 37% of trade payables.
Its payment terms provide important context. The company reports the same 28-to-75-day range for liabilities within supplier finance and comparable trade payables outside the arrangements.
Suppliers can obtain their money early, but M&S says it pays the bank on the scheduled invoice date and cannot extend its own financing by delaying payment to the bank. The scale of the programme is therefore material without, on the company's disclosure, extending M&S's own payment period.
Compass Group PLC reported $1.205 billion within supply-chain-finance arrangements at 30 September 2025, of which suppliers had already received $999 million from banks.
That represents approximately 82.9% of the balance.
Against $3.851 billion of total trade payables, Finance Gazette calculates that the programme accounted for approximately 31.3% of trade payables.
Compass also reported $1.975 billion of underlying free cash flow, putting the supplier-finance balance at approximately 61.0% of underlying FCF.
The company's accounts nevertheless show identical payment-date ranges of zero to 90 days for trade payables inside and outside its SCF arrangements. Compass says it repays the bank on the original invoice due date and continues to classify the amounts as trade payables.
That combination — substantial scale but unchanged disclosed payment ranges — makes Compass particularly useful for understanding why programme size and extended purchaser financing are not synonymous.
Tesco plc reported £1.172 billion subject to supplier-financing arrangements in FY2025/26, comprising £1.033 billion of trade payables and £139 million of other payables.
Suppliers had early-funded £758 million in total, or approximately 64.7% of the balance.
The overall supplier-finance balance fell from approximately £1.245 billion a year earlier, a decline of 5.9%.
Against Tesco's £1.957 billion of reported free cash flow, the balance was equivalent to approximately 59.9% of annual FCF.
Tesco says suppliers independently decide whether to access financing from third-party banks and that commercial requirements, including payment terms and prices, do not depend on participation. Tesco itself pays the provider banks no later than its normal payment terms.
The £1.172 billion balance is therefore substantial relative to annual cash generation, but the disclosure does not support treating it mechanically as an equivalent amount of conventional bank borrowing.
Unilever PLC reported the largest absolute supplier-finance balance in the sample.
At 31 December 2025, €2.665 billion of trade payables were subject to supplier-financing arrangements, up from €2.207 billion.
The increase was €458 million, or approximately 20.8%.
Finance providers had already paid suppliers €2.065 billion, equivalent to 77.5% of the year-end balance.
Against €5.921 billion of annual free cash flow, supplier finance represented approximately 45.0% of FCF.
Unilever reports the same zero-to-180-day payment range for liabilities within supplier-financing arrangements and comparable trade payables outside them, and says payment dates and terms do not vary according to whether a supplier factors its receivable.
The growth in the programme is significant, but the payment-term disclosure prevents a straightforward inference that Unilever itself obtained an equivalent increase in financing.
Diageo plc's FY2026 disclosure highlights why the amount actually funded can be more revealing than the headline programme balance.
Its supplier-finance balance increased from $1.006 billion to $1.092 billion, growth of approximately 8.5%.
Over the same period, the amount already paid to suppliers by finance providers rose from $644 million to $784 million — approximately 21.7%.
Supplier funding therefore grew more than twice as quickly as the overall balance.
Approximately 71.8% of the FY2026 balance had been funded, while the $1.092 billion balance was equivalent to approximately 34.0% of Diageo's $3.211 billion of annual free cash flow.
The additional information changes the interpretation. The headline balance shows a modest increase; the supplier-funded figure shows a much sharper increase in actual programme use.
Coca-Cola Europacific Partners plc moved in the opposite direction.
Its supplier-finance balance decreased from €764 million to €689 million, a fall of approximately 9.8%, while the amount already paid to suppliers increased from €596 million to €614 million.
Consequently, 89.1% of the year-end balance had already been funded, the highest proportion among the eight companies.
Against CCEP's €1.836 billion of comparable free cash flow, supplier finance represented approximately 37.5%.
The combination is more informative than either figure in isolation: the total balance became smaller while the amount actually advanced to suppliers increased.
Associated British Foods plc recorded the largest percentage increase among companies with directly comparable prior-year balances.
Supplier finance increased from £90 million to £125 million, growth of approximately 38.9%.
Of the £125 million balance, £63 million had been paid to suppliers by the finance provider, equivalent to approximately 50.4%.
Against ABF's £648 million of reported free cash flow, the supplier-finance balance represented approximately 19.3%.
ABF therefore illustrates why percentage growth cannot be considered in isolation. Its programme grew fastest, but remained materially smaller in absolute terms and relative to cash generation than the programmes at several other companies in the review.
Rolls-Royce Holdings plc reported £646 million within supply-chain-finance arrangements at the end of 2025, up from £594 million.
Suppliers had drawn £536 million, approximately 83.0% of the balance.
Against £3.270 billion of 2025 free cash flow, supplier finance represented approximately 19.8%.
Rolls-Royce subsequently provided another useful observation. At 30 June 2026, £641 million remained within the programme — little changed from the year-end balance — but supplier drawings had fallen to £467 million (Rolls-Royce 2026 half-year results).
The later disclosure reinforces a pattern also visible elsewhere in the sample: the programme balance and the amount suppliers actually fund can move independently.
Among the seven companies with directly comparable annual balances, five reported increases:
| Company | YoY change |
|---|---|
| Associated British Foods | +38.9% |
| Unilever | +20.8% |
| Marks & Spencer | +9.9% |
| Rolls-Royce | +8.8% |
| Diageo | +8.5% |
| Tesco | -5.9% |
| Coca-Cola Europacific Partners | -9.8% |
Compass did not provide directly comparable prior-year information in the same format because it used transitional relief when applying the amended IAS 7 and IFRS 7 supplier-finance requirements.
There is therefore no uniform direction across the sample. More importantly, Diageo, CCEP and the subsequent Rolls-Royce data show that changes in the headline balance do not necessarily describe changes in supplier take-up.
If a finance provider has already paid the supplier and the purchasing company subsequently settles the amount with that provider, it is reasonable to ask why the obligation can remain a trade payable rather than becoming conventional borrowing.
The answer depends on the commercial substance and contractual terms of the arrangement.
Across the disclosures examined in the Finance Gazette review, several characteristics recur: suppliers generally decide whether to obtain early payment; the purchaser's original invoice date commonly remains unchanged; the finance provider does not necessarily give the purchaser additional time to pay; and the underlying liability still arises from the purchase of goods or services.
Compass provides a clear example. Its accounts state that it repays the full invoice amount to the bank on the original invoice due date and therefore continues to include the amount within trade payables and operating cash flows.
The newer disclosure rules themselves reflect the importance of examining these characteristics. The FRC notes that the requirements are intended to help users assess supplier finance's effect on liabilities, cash flows and liquidity risk and require information including carrying amounts, supplier payments by finance providers and comparative payment-date ranges.
It would therefore be misleading to mechanically add all eight companies' supplier-finance balances to conventional borrowings and describe the result as concealed debt.
The review suggests that simply identifying whether a company has a supplier-finance programme is not particularly informative.
Four questions produce a much clearer picture:
How large is the programme relative to the company's trade payables and cash generation?
How much of the disclosed balance has actually been funded to suppliers?
Is the balance — and supplier use of it — increasing or decreasing?
Does participation alter the purchasing company's own payment terms?
Those questions reveal markedly different patterns among companies operating arrangements that can otherwise look similar in an annual report.
M&S and Compass have particularly large programmes relative to trade payables. Unilever recorded a substantial absolute increase. ABF had the fastest percentage growth from a much smaller base. Diageo showed sharply increasing supplier funding, while CCEP's supplier funding increased despite a declining overall balance.
That comparative information is the central finding of the Finance Gazette Supplier Finance Review 2026.
Finance Gazette reviewed the latest available annual financial disclosures for Tesco plc, Unilever PLC, Diageo plc, Compass Group PLC, Associated British Foods plc, Coca-Cola Europacific Partners plc, Rolls-Royce Holdings plc and Marks and Spencer Group plc.
The companies were selected because they are large UK-listed businesses with sufficiently detailed supplier-finance disclosures to permit meaningful comparative analysis.
The sample is not a complete census of the FTSE 100 and is not presented as statistically representative of all UK-listed companies.
Supplier-finance balances, amounts already paid to suppliers by finance providers, previous-year balances, payment terms and accounting classifications were extracted from company reports and financial statements.
Finance Gazette calculated:
Share already funded to suppliers
Amount already paid to suppliers by finance providers ÷ supplier-finance carrying amount × 100.
Year-on-year change
Change in supplier-finance carrying amount ÷ previous-year supplier-finance carrying amount × 100.
Supplier finance / FCF
Year-end supplier-finance carrying amount ÷ company-reported annual free cash flow × 100.
The FCF measure compares a point-in-time balance-sheet amount with a full-year flow. It is intended to provide context for financial scale and is not a conventional accounting ratio, measure of financial risk or estimate of cash flow generated by supplier finance.
Free-cash-flow definitions also differ between companies. Compass reports underlying FCF, while CCEP reports comparable FCF.
Currencies were deliberately retained in each company's reporting currency. Converting balances reported on different dates into a single sterling total would introduce exchange-rate assumptions without improving the company-level analysis.
Annual financial statements form the principal dataset. More recent interim information, such as Rolls-Royce's June 2026 disclosure, is identified separately rather than substituted selectively into the main annual comparison.
The Finance Gazette Supplier Finance Review 2026 was constructed from primary company financial disclosures.
Finance Gazette extracted and standardised the reported figures, calculated the comparative metrics used in this article and checked the calculations against the underlying disclosures before publication.
Computational and AI-assisted research tools were used to support data extraction, comparison and analysis. Editorial conclusions, source selection and the final interpretation were reviewed against the underlying primary material.
Supplier finance sits between ordinary commercial payables and financial intermediation.
Banks and other finance providers can advance hundreds of millions — sometimes billions — to suppliers while the purchasing company's obligation continues to be reported as a trade payable because its own settlement terms have not materially changed.
The eight-company review shows how significant those arrangements can become.
At M&S, 37% of trade payables were subject to supplier financing; at Compass, the equivalent figure was approximately 31%. At CCEP and M&S, finance providers had already paid suppliers almost nine-tenths of the disclosed balances.
But scale alone does not tell the full story.
ABF's balance rose almost 39%, while CCEP's fell nearly 10%. Diageo's overall balance increased only 8.5%, but the amount actually funded to suppliers rose almost 22%. Rolls-Royce subsequently reported an almost unchanged programme balance alongside lower supplier drawings.
Supplier-finance disclosures therefore provide a view of working capital that can be missed when analysis stops at headline borrowings, net debt and free cash flow.
The useful question is no longer simply whether a company uses supplier finance.
It is how large the programme is, how extensively suppliers use it, how that use is changing and whether the arrangement changes the purchasing company's own payment economics.
The Finance Gazette Supplier Finance Review 2026 is based principally on the latest annual reports, financial statements and results published by Tesco plc, Unilever PLC, Diageo plc, Compass Group PLC, Associated British Foods plc, Coca-Cola Europacific Partners plc, Rolls-Royce Holdings plc and Marks and Spencer Group plc.
Accounting context was checked against the UK-endorsed amendments to IAS 7 and IFRS 7 and the Financial Reporting Council's review of supplier-finance disclosures. The FRC's 2025 review examined disclosures at ten UK companies and confirms that the newer requirements cover liabilities subject to supplier finance, amounts already paid by finance providers and comparative payment due dates.
Dataset: Finance Gazette UK Supplier Finance Dataset 2026.
