close

Ed’s view: Strong-arm tactics will not wash

CN editor pic 2020 landscape

If the sentiment during the coronavirus crisis is ‘we’re all in this together’ it seems that some are more together than others.

These are definitely tough times for businesses, and the catering equipment supply chain has been hit very hard. It’s understandable that all the players in the industry are trying to recoup as many costs as they can when revenues are diving, but there’s a way to do that without spoiling relationships that have usually been built up over a number of years.

Dealers claim it has brought out the best and worst of suppliers – with some bending over backwards to provide flexibility and others playing more of a hardball approach when it comes to debt collection.

Story continues below
Advertisement

I can see that it must be irritating, if not business critical, to have invoices go unpaid, but those who claim to have received threats of legal action insist that should be a last resort in this climate.

Would it not be better for both parties to sit down and discuss a mitigating payment schedule? Surely there should be some appreciation that everyone is in a difficult situation at this time.

Strong-arm tactics leave a bitter taste in the mouth and will not be appreciated by the customer in each case. This destroys long-term alliances and will leave enterprises questioning whether they really want to do business with a partner that completely disregards the exceptional circumstances we now find ourselves in.

Leaving customers hurt and disappointed is hardly beneficial in the midst of a crisis. It just guarantees they will look elsewhere when the industry picks up again – and you would have cut your nose to spite your face.

I suggest we all need to think very carefully about our behaviour now, because competition is likely to be harsh in the next few years, and those that kick you when you are down will be firmly ignored when you rise again.

Tags : debtsEditor's Viewopinionpayments
Clare Nicholls

The author Clare Nicholls

6 Comments

  1. Well spoken Clare and I agree completely, it is always better to sit and discuss rather than throw stones from afar.
    What I would also add (from my relative distance to operational activities now) is that the debtor also needs to engage in communication as early as possible if they might need an extension to terms. There is often a difference between needing an extension and frankly not being able to pay.
    Suppliers have a contract with the ciustomer that says (paraphrasing) I will sell you this item for list less x% discount in return for which you will pay me in y days. Not y=10 or y+30, but y.
    All too often the customer ‘goes to ground’ and doesn’t answer the phone or shunts the payment into limbo by requesting another statement etc.
    Just because the supplier may be a very large company it does not mean they don’t have cash targets, the achievement of which probably forms part of the suppliers’ overall remuneration scheme.
    Think once but do try and talk two or three times.

  2. Clare – an interesting and thought provoking editorial. You specifically reference the dealer/supplier relationship and we have seen great support from regular suppliers in flexing on things like overnight delivery charges for the NHS and care sector. In return we have been asked for a couple of pro forma payments for orders – to support a manufacturer, where they are keeping a tight rein on cashflow and this is equally understandable – and we’ve managed things carefully to achieve this.

    However – you do not mention the “elephant in the room”, where conversely very large dealers appear to have tried to impose their considerable muscle on manufacturers/suppliers to delay payments…at a time where cashflow is of fundamental importance to us all in trying to sustain our businesses!

    Dealers flexing their muscles and starving manufacturers of payment for goods supplied places the entire supply chain at risk – and impacts on all of us further down the supply chain.

    It is very much a “two way street”

  3. Very wise words Clare! Some may suffer from lack of cash …… but don’t suffer from memory loss as well! Those that have just gone into ‘self protection mode’ will indeed have to live with their actions in the future. In my humble opinion …… if a business can’t stomach a reduction in cashflow of a period of 3 months …… it was never really a proper ‘business’ in the first place. If it can, but just won’t ……. that tells you everything you need to know about them.

  4. I agree lets talk, but also dealers need to remember that we have the same bills to pay and are not banks handing out free loans at 0% interest with pay when you like terms. the biggest problem we have faced is a large number of dealers sent emails out at beginning of March saying no payment until this over, or all my staff are furloughed so no one can make payments. it will be interesting to see what happens when it does calm down and suppliers start to adopt a strict invoice policy and reduce credit terms. we also don’t forget !

  5. Great words already written in the trail so far, echo them all. There is a third elephant in the room though sadly which is why these times are indeed more difficult, that being the end user. I suspect you have all had phone calls like ‘there’s nobody in accounts’, ‘the venture capitalists have told us not to pay anyone’ etc etc. Totally agree with Mark re three months cash flow and more, unfortunately everyone will have a threshold at which they can no longer make payments with client debts mounting up and no sign of the establishments we all love to serve opening up. What also worries me is a number of larger operators have cited to us that large sums like £30-50k will be needed in cash just to re-open a unit and then of course the 30-50% capacity of customers allowed on their premises rendering them incapable of getting into profit in the short to medium term. Which of course makes us further down the chain when it comes to settling their debts……….
    Prime example of a vicious circle.
    The industry, including it’s supply chain (especially it’s supply chain i say !!) will no doubt need more Govt. help if the virus lasts as long as it would seem to be now predicted, they didn’t extend the furlough scheme until end October because it’s any where near the end.

  6. Communication is key at this time. We are all in the same boat with suppliers to pay. We have to use the government support to keep the supplier chain moving. Good working relationships that have been built in the past will get us all through. Keep talking and working together!

Leave a Response

Protected with IP Blacklist CloudIP Blacklist Cloud