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Providing Liquidity for Uncollectible Sales Act

Foodservice Associations applaud introduction of PLUS Act

Representatives Darin LaHood (IL) and Jimmy Panetta (CA) introduced the Providing Liquidity for Uncollectible Sales (PLUS) Act. This legislation provides a tax credit to offset uncollectable debt incurred as a direct result of COVID shutdowns. It is supported by the United Fresh Produce Association, the International Food Distributors Association, and National Fisheries Institute. 

The foodservice distribution industry collectively experienced more than $12 billion in uncollected debts as restaurants and other facilities shutdown in response to the global pandemic and were not able to pay their distributors. Fruit and vegetable distributors hold an additional $5 billion in such debt, and broadline foodservice distributors reported more than $5 billion of debt.

“Produce foodservice distributors absorbed a devastating blow with the spring shutdown of the restaurant and hotel industry. The impact of lost inventory and unpaid bills is not recoverable,” said Tom Stenzel, President & CEO of United Fresh Produce Association. “I commend Representatives LaHood (IL) and Panetta (CA) for introducing the Providing Liquidity for Uncollectible Sales (PLUS) Act, a helpful solution to an insurmountable challenge for produce foodservice distributors and the companies on both ends of their business agreements.”

Foodservice distribution is a crucial part of the food supply chain, delivering fish, fruits, vegetables, meat, and other products to restaurants, schools, hospitals and long-term care facilities. Distributors provide not only food supplies but the essential financing their customers need to purchase these products. Restaurants buy their supplies on payment terms that allow them to generate revenue before the bill comes due, normally 30-60 days after delivery. In the aftermath of the sudden and near complete closure of the food-away-from-home channel, sales plummeted, customers were unable to pay their bills and distributors were left with more than $12 billion in debt.

While many of the provisions of the CARES Act provided critical assistance for foodservice distribution companies, it did not account for the biggest issue they face: large, unpaid debts owed to distributors for food that restaurants could not use due to COVID-related shutdown orders. Tax credits for this $12.2 billion in outstanding debts will provide the liquidity distributors need to continue to extend credit to their restaurant customers and help them get back on their feet as the economy restarts.

Foodservice distributors themselves suffered more than a 50 percent decline in sales due to the global pandemic, making it difficult to provide the financing their customers depend on to run their businesses; jeopardizing restaurants’ ability to purchase food and ingredients. Without restaurants and other places where people eat out, the economy will be missing a significant part of the $1 trillion food-away-from-home economic driver. The PLUS Act provides a solution to this complicated and critical challenge for the food supply chain.

For more information:
Mary Coppola
United Fresh Produce Association
Tel: +1 (202) 303-3425 

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