Apple Retail Suppliers Complain About New Payments Structure

Third-party producers of products such as iPhone and iPad cases say that the new payment terms Apple is imposing will hurt their cash flow and force them to take back unsold merchandise, Britain’s The Telegraph reports.

Apple is extending the time it has to pay vendors to 60 days from the previous 45 days. Sources told the newspaper that Apple is also switching to a consignment model under which suppliers of unsold merchandise are required to take it back.

The Telegraph quoted an Apple spokesman as having said: “We deeply value the close relationship we have with the world-class companies that sell their products via Apple.com and in our stores. Apple regularly assesses the assortment of the third-party products we sell and the structure of our models to provide vendors with the ability to reliably and confidently grow their business.”

In its latest balance sheet filed with the federal Securities and Exchange Commission (SEC), Apple reported having cash and cash equivalents of $36 billion and total current assets of $154 billion. For the three months that ended Dec. 26, 2020, Apple reported sales of accessories — both its own and those produced by third parties — of $13 billion. In the case of products produced by third parties, Apple books the sale prices as revenue if it purchased the product before re-selling it.

In its latest financial statements, as of December, Apple described its policy for third-party products as a mix of consignment and purchase-and-resale, though without using the term “consignment.” The note states, in part: “The company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product.”