Nearly every industry is experiencing some type of disruption in B2B payment flows, from comic book publishing to fashion to food and beverage. Not all organizations are feeling that disruption in the same way, however.
This week's B2B Data Digest looks at the numbers behind fluctuating supplier payment terms in the midst of coronavirus market volatility. While some organizations in the food, government services and healthcare industries are accelerating vendor payments, other companies in markets — particularly the fashion retail arena — are taking a major hit in the form of lengthy Days Sales Outstanding times, with some stores nixing supplier payments altogether.
14-day payment terms for small suppliers were put in place by Australian grocery chain Woolworths, which is accelerating its B2B payments to support those vendors. Reports in The Australian said the move aims to help its business partners maintain healthy cash flows, with regular vendors guaranteed payment within 30 days of invoice receipt. In a statement, Woolworths Chief Financial Officer Stephen Harrison described the company's suppliers as "an integral part of our supply chain."
A 28-day reduction in supplier payment terms for some Network Rail suppliers aims to help those vendors of the U.K. railway network owner and manager bolster their finances. Some small suppliers will see a seven-day reduction in payment terms, while others will be paid up to four weeks faster. "Our priority is to support the supply chain as much as possible through these unprecedented times," said Network Rail Commercial and Procurement Director Clive Berrington in a statement, Construction Enquirer said.
30-day extensions were added to supplier payment terms by Topshop parent company Arcadia, according to recent reports. Drapers Online reported that a letter sent by the company notified vendors of canceled orders and the extended payment term plans, which lengthen standard payment terms to 90 days, up from 60 days.
100 percent of payments will be made to healthcare suppliers by Medicare as it steps up its support to accelerate cash flow in the healthcare provider arena. Reports said suppliers can request up to 100 percent of payments for an extra three-month period, while critical response hospitals can access up to 125 percent the normal amount in response to stress on the industry as a result of coronavirus.
13,000 small suppliers will see accelerated payment terms from Empire Company, the Canadian food retailer said. A press release announced the company's plans to pay small vendors within 14 days "without exception," while also offering a two-month rent deferral program to its small business tenants across properties.
A $196,000 decline in revenue hit one New Look supplier, which told the BBC that its fashion retailer customers threaten to "devastate smaller companies down the supply chain" due to delayed or canceled payments. According to reports, New Look has suspended all vendor payments and is canceling orders from suppliers for both its spring and summer clothing lines.
$53 million in additional payments to suppliers will be made by defense contractor Lockheed Martin, which announced vendor payments have now been increased to $106 million as it looks to ease cash flow constraints through its supplier base. The funds are issued as interim payments to contractors, with Lockheed Martin also noting that it has hired about 1,000 new employees.
$4 billion worth of H&M supplier orders is now in limbo as the fashion retailer confirmed it would cancel new orders from the 230 Bangladeshi vendors that provide the company with clothing and textile products. H&M said it would accept the orders that have already been shipped, and said it will pay its suppliers for those orders under previously agreed-upon payment terms.