Retailers are causing major cashflow problems for food suppliers by docking payments for goods, it was claimed this week.

Credit information agency Graydon UK said there was "continuing frustration" at the practice by "large supermarket chains".

In one case, £1m was deducted from a big supplier's £7m invoice, claimed Graydon UK MD Martin Williams, who described the total number of county court judgments served on the big four in the past six years - 344 - as "alarming".

"The biggest concern relates to the accepted practice of 'pay and deduct', whereby the supermarkets pay on terms but don't pay the full amount on the invoice," he said. "A few days later, the supplier gets a debit note, spelling out why the supermarket has deducted an amount from the original figure."

A deduction could be made for a number of reasons, for instance to reflect a promotion or shelf placement. But locating the right staff at a retailer to sort out disputed amounts was "a very time-consuming exercise" and disputes could take months to solve, said Williams. The problem was exacerbated by the growing trend for retailers outsourcing their call centres to India. Meanwhile, large sums were sitting in supermarkets' bank accounts, earning interest that swelled profits.

The number of CCJs supported anecdotal evidence from suppliers that supermarkets employ "unfair business practices relating to invoices", he said.

However, Tesco and Sainsbury's insisted they dealt with suppliers fairly. "The volume we deal with means the occasional mistake is made, though we strive to minimise these," said a Tesco spokesman.

A Sainsbury's spokesman added: "We pride ourselves on paying our suppliers on time and go out of our way to make sure that this happens." A new electronic payment system was being trialled to help Sainsbury's suppliers monitor the progress of invoices and would be rolled out later in the year, he said.