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PAYMENTS SPECIAL, part 2: Suppliers share their cash flow frustrations

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On the supplier side of the fence, there are strong views on payment obligations, especially at this time.

According to Hobart UK Equipment Division’s MD Dave Riley: “All businesses, whatever their size, should not be dependent on withholding suppliers’ payments to fund their business.

“Today we find the country operating under unique and never before experienced circumstances. That said, the Covid-19 situation started to affect all our businesses from 1 March 2020. A company would therefore expect all goods supplied to your company prior to that date to be unaffected by the current situation.”

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He underlined to dealers: “The orders you have an issue with we can look at together to come to a suitable agreement on payment.”

Meiko UK MD Paul Anderson reports the firm has reached agreeable terms with dealers.

At warewashing sector competitor Meiko UK, MD Paul Anderson reported: “We have had a lot of communication between our partners and together we reach agreeable terms during these testing times.”

To keep the business running well, he detailed: “Each week we review the current trading situation and ensure alongside furloughed staff we have enough cover for the whole of the UK in terms of administration, sales and service. We are actually quite active at present in terms of administration, quotes, projects and service. Our dealers are sending us work, and we duly oblige and support them.”

Simon Lohse, MD of major combi oven firm Rational UK diplomatically believes there is no single solution to current cash flow issues, but described: “We work in partnership with our dealers. Our aim is to try to maintain the liquidity of the end customer, the dealer, ourselves and, in turn, our own suppliers.”

He emphasised: “It is vital that, together, we have a frank and open communication regarding outstanding, due and future payments. Without such dialogue it becomes virtually impossible for us to maintain support for our partners.”

Also in the cooking equipment segment, Welbilt’s UK and Ireland sales director Steve Hemsil said: “We have received a number of requests for extension of payments in the UK from small businesses to global distributors. We review each request accordingly and make a decision based on a number of factors. We want to support our dealers at this difficult time and, as always, good communication is key as well as offering solutions for payments rather than just simply extending terms.”

At British induction hob manufacturer, Induced Energy, MD Rosie Sanders detailed that the firm is owed quite a lot of money by its distributors: “Out of 22 companies sent statements, only five have read receipts and no-one has replied. We have offered payment plans but no-one has taken up the offer.”

She concluded: “The key message to distributors would be to pay whatever you can as soon as you can as most of the companies in the catering industry will be in similarly difficult positions and some payment is better than no payment to try and keep a small amount of cash flowing.”

Major supplier, Jestic Foodservice Solutions, is experiencing similar problems to many dealers, according to MD Ben Dale: “Possibly we have more cash and credit facility heading into the shutdown but our cost base is also considerably higher with 100 employees and significant creditors who want and need to receive payment.”

Having furloughed most staff, Dale analysed: “By far the biggest problem we all have is a lack of visibility regarding when the hospitality sector will be starting back up.”

For dealers, he cautioned: “There won’t be lots of goodwill towards debtors who didn’t pay and didn’t communicate, but there will be bucket loads of it for those who communicate honestly.”

Grande Cuisine’s Steve Hobbs believes there is more understanding on payments in these times.

Fellow supplier Grande Cuisine has been doing its best to run its accounts department as normal, though director Steve Hobbs underlined: “The only time we see payment patterns anything like this is during a recession. However, unlike a recession, where some people are more badly affected than others, this is something that has affected pretty much everybody and so there is a more general air of understanding when it comes to payments.”

While the company has contacted its debtors and is being as considerate as possible, it is also asking dealers to let it know if there are difficulties, so that an agreement can be sought.

Elsewhere, Victor Manufacturing’s MD Phil Williams noted that all but a very few of the manufacturer’s dealer network has gone quiet, with some sending letters saying they are pushing out payment terms by an additional 60 days. “At the moment we are continuing to take orders and supply our distributor network that is still trading and open but the vast majority are now not really trading at all,” he said. “But the ones that are still trading despite pushing payment terms out are still expecting to get credit – mainly the larger distributors.”

He urged dealers to keep communicating, and to tap into government support schemes where possible.

In the refrigerator sector, Precision’s MD, Nick Williams, said of the firm’s dealers: “25% have paid as usual, 25% have contacted us to explain their situation, which on the whole is that they are awaiting payments from their customers before being in a position to pay us. Disappointingly, the remaining 50% have neither paid or contacted us.”

He continued: “We have agreed on payment plans for a handful of dealers but other than that, we have little or no protection against customers whose cash flow can’t sustain their purchase commitments.

“We have asked customers for pro forma payment since the start of the current crisis so as not to increase our already significant exposure to potential bad debts.”

At coldroom specialist, Celltherm, business development manager James Connolly reported: “Payments have been slower and some dealers have communicated their non-payment for the foreseeable future which is very concerning.

“Communication is key and we ask all dealers to support the flow of money through the system where and when they can. We doing our best to pay our own supply network and we ask for a reciprocating arrangement with our dealer network.”

He advised: “The key message we would like to get across to our dealer network is that if we all stand as one, we will get through this.”

Specifi’s Nic Banner warned that if dealers don’t pay outstanding invoices now, suppliers won’t forget this in the future.

At design and quotation platform Specifi, vice president of sales for UK and Ireland, Nic Banner, was emphatic: “If everyone paid their outstanding invoices the country will not grind to a halt, businesses will be able to support their furloughed workforces, you feel better for doing it, your supplier will appreciate it and the cogs of industry will keep turning.

“If you do not pay your outstanding invoices, it will not be forgotten. The wheels of industry will stop turning, and you just may be responsible for putting someone under so much mental pressure that they may feel completely unable to cope.
“Be nice, pay now!”

While one supplier, which wished to remain anonymous, was unimpressed by some conduct witnessed, saying: “We have experienced a number of distributors issuing statements stating ‘due to Covid we will pay you when we can’, despite knowing they have been paid by the end user.

“Also Nisbets has issued a statement changing its contractual agreement with suppliers, rendering its terms effectively null and void. I know factories that will be moving the company to pro forma in the future or closing their account.”

The supplier asserted: “It is crucial to keep paying the supply chain through this period to ensure a reliable line of supply once we all come through this.”

In the ventilation sphere, Ian Levin, commercial director of Kitchen Vent Technical was more positive: “So far, we are pleased with the way everybody is trying to support the payment process wherever possible.”

Though he did caution: “Bullying suppliers for extended credit is not something that we would try on our supply chain and nor should it be something we would expect from our highly respected customers.”

Levin concluded: “I think it is our duty to safeguard our business as much as possible by being careful with spending; strictly controlling costs, minimising director’s remuneration, protecting our supply chain where we can, and extending cash flow wherever possible.”

At competitor HMA Ventilation, director Hayley Davis detailed that in the lockdown aftermath, the firm received emails from distributors to say they were unable to get to work to pay invoices. “In today’s age of technology where you can use your mobile phone as your bank, this was seen to be a delaying tactic,” she commented.

She underlined: “To Mr Big Company, I would remind him that he has enjoyed reaping the rewards of all the work us ‘small companies’ have done over the years.

“Good businesses, including HMA, had foreseen what the government was going to announce, and as a result took the necessary steps to make sure that no payments were made late.”

Over at Foodservice Equipment Spares, director Caren Harvey reported: “We have been very lucky in the main, as the large majority of our customers have maintained their payment arrangements, or communicated and reassured us that they would maintain business as usual in bringing payments up to date.”

However, she noted: “In these times when supporting our industry and each other is more important than ever, we feel that ‘hanging on to what you have’ could have a detrimental effect on businesses, especially smaller businesses that rely heavily on agreed terms being honoured.”

Harvey concluded: “The continued flow of finance is critical if our industry is to return to normal quickly following the current crisis.”

Tags : cellthermfoodservice equipment sparesGrande Cuisinehma ventilationHobartinduced energyjestickitchen vent technicalMeikopayment termspaymentsPrecisionSpecifiVictorwelbilt
Clare Nicholls

The author Clare Nicholls

1 Comment

  1. It is not acceptable for anyone to withhold payments whether big or small. It is not up to anyone else to manage your cash flow, why should others bank role another business. I hope the Manufacturers and Distributors remember who met their commercial obligations…

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