In a major win for suppliers to Coles, they now stand to benefit from updated payment terms which went into effect this month.

Coles has extended the timing of deductions it makes to money it owes to suppliers when a shipment sent to its distribution centre has missing items, or is underweight, also known as a “short delivery”.

Previously when a food and grocery supplier accidentally sent a short delivery to Coles, the supermarket would immediately penalise it by deducting money from the next immediate payment it owed the supplier.

However, under the new rules, Coles will instead deduct the money from the invoice that is directly related to the short delivery. Therefore, the supplier would not have the money taken off from its invoice for a few weeks or a month – until when that specific invoice is being processed.

“We actively seek feedback from our suppliers and are committed to understanding and addressing any areas for improvement,” a Coles spokesman told The Australian.

“After reviewing our accounts payable process, we are pleased to make these changes to our claims process to simplify deductions for our suppliers.

“We will continue to gather feedback through our regular supplier forums, surveys and from our suppliers directly to identify and address the areas that matter most to them.”

Australia’s $163 billion food and grocery manufacturing sector has been struggling under rising input costs and also shrinking profitability. Earlier this year, some suppliers claimed that Coles was asking them to reduce prices by as much as 14 per cent as inflation eased.

Earlier this year, a Senate inquiry was undertaken into how major supermarkets including Woolworths and Coles – which control around 65 per cent of the supermarket sector – operate in the country and looked into various aspects including their pricing mechanisms and supplier agreements.

In June, Treasurer Jim Chalmers agreed to a mandatory Food and Grocery Code of Conduct. The code is mandatory for all grocery retailers and wholesalers with an annual turnover greater than A$5 billion.

At present, this includes Woolworths, Coles, Aldi and Metcash, and will perhaps subsequently include Costco once it crosses that threshold.

The code introduced penalties for the more harmful breaches with the maximum penalty the greatest of A$10 million, three times the benefit gained from the contravening conduct or 10 per cent of turnover in the preceding 12 months.

To protect suppliers, the code stipulates that small suppliers (with fewer than 100 staff or turnover below A$10 million) and larger suppliers with the system included in their supplier agreement would be able to make complaints to code arbiters who would then dispense judgments.