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Suppliers see no solution to late payment problem

Suppliers have dismissed government plans to launch a consultation on late payment terms, saying further legislation would either seriously damage the fashion industry’s network or have no impact at all.

Prime Minister David Cameron unveiled plans this week to look into the issue, saying “late payment can have devastating effects on our small and medium-sized businesses”.

But while suppliers agreed it was a major problem, many argued against more legislation, stricter enforcement of existing legislation or public naming and shaming of culprits, saying it would either upset the balance of the fashion trade or fail to address the problem.

One supplier, who deals with both independents and high street retailers, said the bigger retailers had moved towards 90-day payments – 30 days longer than the deadline stipulated by the EU. But he acknowledged that “in general if they say they are going to pay in 90 days, they pay in 90 days”.

The supplier said it was indies who frequently failed to make payments on time, and in some cases had extended terms to 120 days.

However, he insisted stricter legislation would kill off “at least half, maybe three quarters” of indies if implemented because they were “under the cosh” from the economy, bad weather and exacting demands from must-have brands.

Some suppliers who spoke to Drapers reported that in a bid to delay payments some retailers claim not to have received invoices, but this would be difficult to prove legally. “If they don’t get you one way, they’ll find another,” one said.

One high street supplier said the worst of his customers deliberately extended payment terms by “bouncing” invoices around but that there was no legislative solution.

“It’s not a legal issue, it’s just a case of whether the larger chains would do anything better. But I think it’s more likely they will just cut the middle-man supplier out and go straight to the factories,” he said.

Another supplier claimed some retailers he dealt with would delay payments at the end of a half- or full-year trading period in order to improve liquidity.

“It is rather incongruous that retailers that have cash flows and should be able to settle their debts quickly are among the slowest payers,” he said.

A London-based textile manufacturer agreed the bigger retailers were often late. “You send the invoice off and then don’t hear anything and really have to chase for it,” he said.

But he argued against introducing a “naming and shaming” approach, noting that the fashion supply chain was complex and no single business would be to blame.

However, another high street supplier argued that enforcing the current 60-day cut-off would have a huge impact on her business.

“The textile industry is being taken for a ride by big retailers who think they can boss you around, and you have to accept what they say if you want to continue being a supplier,” she said.

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