Kroger's 2018 Net 90 Letter Was "Not Considered Optional". It Is the Cheapest Thing in Your Account

Kroger's June 2018 letter to every supplier standardised payment terms at Net 90, effective 1 August 2018, and described them as not considered optional to Kroger. At the time Kroger was graded "B" for payment timeliness, which The Produce News defined as 22 to 28 days from invoice date to receipt of check.

So the ask was not 90 days of negotiating. Against the 28-day end of that band it is a stretch of 62 days, delivered by letter, with a start date, and PACA's trust provisions cap payment for covered perishable agricultural commodities at 30 days, so accepting Net 90 risked forfeiting repayment protection.

Your payment terms are a bigger number than your dispute queue, and the rest of this programme only ever covers the queue. If your problem is cash timing rather than disputed dollars, the terms are the lever. Here is the working.

The two documents your CFO should read

Two, and only two.

The payment-terms clause in your supply agreement. Net 30 or Net 90, what date the clock starts from, and what happens to it when a deduction is taken. That last one is where the two halves of the account meet.

Whether a PACA trust exists for your products, and what it covers. PACA is the Perishable Agricultural Commodities Act, the federal statute covering perishable agricultural commodity sales. A trust is statutory protection for the supplier's money in the buyer's hands, not a term you negotiated, and it does not appear on your invoice. Whether one exists, what it covers and whether a 90-day term puts it at risk are legal determinations for your own counsel.

Kroger publishes no supplier or EDI documentation at all, the portal, the 180-day window and the deduction codes come from our own compiled reference, not from Kroger. That makes your signed agreement the only terms document you will ever hold.

The arithmetic

One assumption, stated up front: a 10% annual cost of capital. That is ours, not a published rate and not Kroger's. Put your own in and re-run the line. The invoice is $1,000,000 over a 365-day year, because that is the size the early-pay figure was quoted on.

$1,000,000 at 10% is $100,000 a year, or $273.97 a day. Sixty days is $16,438, and that is the entire carrying cost of the policy on that invoice.

Now the other side. Take a supplier shipping $1 million of covered product a month, our illustration, again matching the invoice size. Thirty days of that is $1,000,000, which is roughly the ceiling on what a trust protects in that account.

You would be trading about $1,000,000 of statutory protection for $16,438 of financing cost. Roughly 60 to 1, on your own numbers, at a rate you assumed. The financing cost is real and worth an argument. It is not the same order of magnitude as what the stretch is asking you to sign.

If you do not ship perishable agricultural commodities the trust half does not apply to you, and what is left is a $16,438 line, an ordinary conversation with your bank.

What "not considered optional" actually meant

Literally: a letter went to every supplier, with a stated effective date and a stated rationale the reporting gave as smoothing Kroger's cash conversion cycle. Nobody was asked whether the policy applied.

Not literally: within weeks, more than a dozen large shippers had been told they were exempt, and Kroger brokered factoring accounts for at least two mid-sized shippers. An exemption granted individually, more than once, is not a policy. It is evidence the ask was available to anyone prepared to make it.

Three levers.

Take the discount. Kroger partnered with Citibank on an early-pay discount its own reporting called very small: under 0.72% on a $1 million invoice paid in about 10 days. That is $7,200 on $1,000,000, and it buys back 80 days. Our arithmetic from there: 0.72% against 80 days is a 3.3% annualised cost of the money, so if your revolver costs more than 3.3%, the discount is cheaper. Note the rate is "under" 0.72% and the 10 days is an average.

Factor it, and let the buyer broker it. The C2FO accounts were arranged by Kroger on shippers' behalf, and a factoring fee on a 90-day receivable lands in the same column as the $16,438. The supplier associations rejected the arrangement on its own terms; the buyer brokering it is itself the argument to have.

Structure the trust deliberately. Not out of a payment-terms clause and not out of a trade article. Get your counsel to tell you in writing what your product list attracts, before you sign anything mentioning 90 days.

Whether this is still true in 2026, which the record does not settle

Two things in the public record point in opposite directions and neither is a Kroger document: the line you will hear repeated, that Kroger backed off Net 90 in July 2018, which our record traces to a crowd-edited encyclopedia entry; and against it, a 2020 The Produce News headline, "Kroger announces new PACA Trust busting policy", implying a later variant. Both are weak.

Nobody in the public record supports telling a supplier that Kroger dropped this permanently. Do not pick a side. Ask your Kroger contact for your current payment terms in writing, because that document beats both headlines.

What Net 90 does to the dispute you win

A deduction does not create a receivable. It reduces what arrives on the day your terms say. Win it and the credit lands on a later remittance, so you fund the recovery for 90 days where you used to fund it for 30.

On every deduction you win, Net 90 leaves you better off in margin and worse off in cash. Same dollars, sixty days apart, and the difference is a working-capital position somebody has to own.

Your recovery rate decides how large that is, and no retailer publishes it. What your terms decide is when those dollars arrive.

Nobody publishes how long a Kroger dispute credit takes to clear. Our own reference carries a 45-to-90 day response timeline and a 180-day filing window, and both are ours rather than Kroger's, treat the sum as a reason to ask your buyer, not a forecast. The balance-sheet consequence is the part that belongs in a budget, and what a chargeback reserve implies that a remittance advice does not is worth a separate read.

The UK wrote the standard down and still published no number

The Groceries Supply Code of Practice, published 4 August 2009 and still the operative version with the page updated 13 July 2026, is the closest thing the industry has to a published supplier-facing framework. It bans payments for shrinkage and gives you a Senior Buyer review on written request.

Its payment clause is one sentence, pay in accordance with the supply agreement "and, in any case, within a reasonable time after the date of the Supplier's invoice".

The one written grocery payment standard in existence sets a standard and publishes no number. Thirty, forty-five, sixty days, none of them is in the document, and the code that caps the charges a retailer may impose says nothing about how long it may take to pay one.

What this post is not

This is not legal advice. Whether PACA reaches your products, what a trust covers and whether 90 days puts one at risk are questions for a lawyer who works in the Perishable Agricultural Commodities Act. Our record holds a Supermarket News headline from 26 June 2018, "Kroger's new payment policy could violate federal law", and no decision behind it: legal-press framing in the week of the letter, not an outcome.

Two questions, in writing, settle more than anything above: what are my current payment terms, and does a PACA trust exist for these products.

Thirty days is the only date in this argument that is a legal cap rather than a commercial choice, and the letter that stretched you to ninety was dated June 2018.