As more and more companies struggle
with their cash-flow issues, they are revisiting their payment terms with their
suppliers.
The latest review from Marks and
Spencer has resulted in them imposing extended payment terms from Freight-on-board (FOB) suppliers who have seen their payment
terms extended from 60 days to 75 days, while full-service-vendors (FSV), who
transport, store and deliver goods for M&S, will see their payment delayed
from five weeks to seven weeks.
The changes, which will boost Marks & Spencer's cash flow, could anger suppliers. M&S's major suppliers were upset in October 2011 when the firm asked them to make a one-off contribution of 1.25% of their annual turnover with the retailer to its store revamp programme and associated advertising.
The changes, which will boost Marks & Spencer's cash flow, could anger suppliers. M&S's major suppliers were upset in October 2011 when the firm asked them to make a one-off contribution of 1.25% of their annual turnover with the retailer to its store revamp programme and associated advertising.
In reality the suppliers have little
alternative – if you want to keep trading then you have to accept the
“realpolitik”.
The key is to make the most of
available cash resources which inevitably leads to some hard commercial
decisions. Late payers are a luxury that no company can afford in this climate.
Stock must be turned into cash as quickly and efficiently as possible.
Those who either will not or cannot
adapt to the demands of today’s business will go the way of the dodo.
No comments:
Post a Comment