The manufacturing community responds…

Posted on 16 Mar 2009 by The Manufacturer

Comments on Graham McQuade's petition to make a 28-day-maximum payment term law...

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Mike Turner, a consultant at Promweld:

There are no fundamental problems with any large business paying its suppliers within 28 days (or even less). It may be a bit harder for large manufacturers who don’t get the instant cash turn of big retailers though.

Throughout history the rich and powerful have always been pretty good at looking after their own interests and at framing or resisting laws that threaten those interests. That’s why we are in economic meltdown. For ‘leading figures’ to babble on about it being unforeseen is just pure rubbish.

The problem with Graham’s 28 day payment petition is even if government pays the slightest attention to it, which is doubtful, is how it is to be enforced. There are, I believe, already legal provisions that allow one to add a charge for late payment but I don’t know any small business that has dared to invoke it.

Bruce H Anderson, senior industrial engineer, McLane Company (US):

Payment terms of 28 days should not be a problem. Historically the turn rate on the slowest (and smallest) of grocery categories on this side of the pond has been around 2 months, and the bulk of the inventory turning in 3 weeks or less (sometimes a matter of days). A supplier may have clearly written payment terms, including late fees, but may be loathe to press the issue for fear that their status and shelf space will be adversely affected. What we may have here is abuse of power on the part of the buyer, and a little bit of short-sightedness. Practices such as working the “float” (for which the supplier must bridge the gap), forward buys, diverting, all are ways to advance the bottom line without paying attention to the core fundamentals of the business. When these deals and practices evaporate there may be some enterprises who find they cannot abide the harsh light of day.

Perhaps letting the public know of the problem will bring about the needed change. A picket line or two in front of a major offender’s establishment/headquarters would help get the word out, maybe even make the evening news! I wish Mr. McQuade success in his efforts.

Phil Acock, managing director, Fourayes Farm Ltd

This couldn’t have come at a better moment. I’m not sure that the supermarkets are the worst offenders actually; Fourayes supplies ingredients into the manufacturers and it is becoming common practice to extend payment terms, with very little chance for negotiation.

Our terms are 28 days, but it is becoming common practice for customers to insist on 60 days from end of month. From the information that I have the supermarkets are paying quicker than this.

This means probably that not too many manufacturers will sign up!

Peter Mackereth, technical director, Pyranha Mouldings:

This argument seems somewhat partial and while it is undoubtedly true that frequently big companies bully their customers on payment terms, it ignores companies like ourselves who make branded products that sell largely either directly or indirectly through small specialist retailers, many of these are appalling payers for a variety of reasons and this is not going to change whatever legislation says, so if all industry pays on 28 days, this would leave OEM’s like ourselves squeezed (even more!)

The petition is here if you’d like to sign it