Morrisons Suppliers Asked To Wait For Pay

[interestrateripoff]

http://www.independent.co.uk/news/business/news/morrisons-suppliers-asked-to-wait-for-pay-9892189.html

The supermarket giant Morrisons has asked at least 180 of its food suppliers to extend its payment terms to 60 or even 90 days – in many cases more than doubling their current wait.

Suppliers say they have been called to its headquarters in Bradford to discuss the changes. One, who has been asked to go from his current 30- day term to 60, said: “They dressed it up like it’s all good news for us, but it just means them holding on to our money for twice as long.

“I don’t see why we suppliers should have to shore up Morrisons’ balance sheet.”

In return for accepting the new terms, Morrisons is offering suppliers access to an invoice discounting scheme that it has agreed with Lloyds. Under this arrangement, the bank will lend suppliers what the supermarket owes them upfront, at an interest rate of Libor plus 0.75 per cent.

Morrison's in trouble or just wanting to keep it's cash for longer to improve the books?

[Tin Foil Hat]

Morrison's have gone full Tesco (even have some of their execs I thought). A real shame, my first employer back in the late 80s and was always my backstop for a straightforward supermarket.

Now it's a green and yellow Tesco complete with the same tricks and deception, the same lack of care in presentation and stocking up and the same level of unhappy workers.

Why on earth they have taken this route when it was so obvious what the end point would be is beyond me. Someone has done some top class bullshitting to get their way (and bonus I'd imagine too).

[billybong]

Morrison's have gone full Tesco (even have some of their execs I thought). A real shame, my first employer back in the late 80s and was always my backstop for a straightforward supermarket.

Now it's a green and yellow Tesco complete with the same tricks and deception, the same lack of care in presentation and stocking up and the same level of unhappy workers.

Why on earth they have taken this route when it was so obvious what the end point would be is beyond me. Someone has done some top class bullshitting to get their way (and bonus I'd imagine too).

They might be copying Tesco but even if Tesco staff aren't that happy Morrisons staff seem to show it off far more and have done for quite some time now. Their senior management seems to have far less grip on the staff on the floor including some (apparent) managers.

That's not to say that the overall employment system for UK workers is any good but with Morrisons the discontent seems more blatant and made obvious even to good customers.

Edited November 29, 2014 by billybong

[gabathegreat]

I used to work for one of the big UK banks and these supplier finance /reverse invoice discounting schemes were being pushed quite heavily to the supermarkets.

This can actually benefit Morrison's smaller suppliers but the big ones wont like this one bit because they already have access to cheap funds.

[Errol]

Sounds very dodgy to me.

[OurDayWillCome]

Standard practice ever since I started my business (over ten years ago). Poundland are the worst I have experienced - they were stalling on payment after 90 days. Got my revenge when they realised I still held copyright on something they wanted :-) Told them to F'Off - manager had never experienced anything like that in her life - try paying on time then!

[Renewed Investor]

This is becoming standard in the Engineering field too. Most of my clients used to pay up after 30 days. Now they ask for a 60 day time frame, a couple have even asked for 90 days to pay. I'm not happy about it but I've gotta roll with it or they'll go elsewhere.

This economy is running out of steam fast from everything I see.

[renting til I die]

This is becoming standard in the Engineering field too. Most of my clients used to pay up after 30 days. Now they ask for a 60 day time frame, a couple have even asked for 90 days to pay. I'm not happy about it but I've gotta roll with it or they'll go elsewhere.

This economy is running out of steam fast from everything I see.

Interest times...I get the feeling that something is afoot!

[Si1]

Apart from sitting on cash, what's the advantage to the retailer?

Is it easier for them to plan ahead or something, somehow? Easier for them to deal with a greater variety of small suppliers perhaps somehow?

[SNACR]

If they were on 30 days they had been doing well really.

[Bruce Banner]

The late Arnold Weinstock started that nonsense years ago to build a cash mountain for GEC. When he retired, he handed over the reins to his successor who spent the cash mountain, borrowed to the hilt and bankrupted the company in a very short space of time.

[SNACR]

Apart from sitting on cash, what's the advantage to the retailer?

Is it easier for them to plan ahead or something, somehow? Easier for them to deal with a greater variety of small suppliers perhaps somehow?

It's generally ignored but suppliers don't want really retailers to pay up front. Can't be arsed with a massive exposition on the ins and outs but, there certainly is a cost to both parties processing more invoices and deliveries. It makes sense to have the same terms across as much of the supply base as possible.

The main distortion, of which the public have no understanding when bill payment is discussed in the media, is invoice discounting/factoring. Where a supplier has such an agreement in place it is likely they can get immediate funds as soon as they generate the invoice. This means that if they urgently need money to pay wages they have just got to get an agreed order and they can get funds for a large percentage of the order value.

Even if a customer is paying pro-forma (up-front) prior to delivery of goods it might take them a couple of days to process the payment, or they will delay until their warehouse is in a position to accept the delivery, but the supplier needs the money immediately.

In an e-commerce world though the case for supplier credit is a lot more thin.

[frozen_out]

Morrisons is an awful employer. Probably the worst of the big 4. Low wages, sub-par conditions, imcompetent managers. Terrible.

[mrcuban]

Deflation volcano approaching.Anyone who misses this sign is ******ed

[FIGGY]

If they were on 30 days they had been doing well really.

I love this kind of reply. I've had the begging letter from morrisions and it was treated in the way they always are by me, which is telling them to go jump. 30 days are good terms but the Joint Business Plans in place with a retailer are built on the FULL trading terms. I've said we will happily move to 60 days if we can re negotiate our JBP to compensate I.e. its cost neutral.

Do also note that one of the reasons that Morrisons need to offer factoring as because is probably going to get a lot more expensive to factor their debt as their credit rating gets worse.

Final point is that all retailers up up to this sort of thing. Waitrose were very lazy and sent a demand to all supplier for a x% discount but I just ignored it.

[FIGGY]

It's generally ignored but suppliers don't want really retailers to pay up front. Can't be arsed with a massive exposition on the ins and outs but, there certainly is a cost to both parties processing more invoices and deliveries. It makes sense to have the same terms across as much of the supply base as possible.

The main distortion, of which the public have no understanding when bill payment is discussed in the media, is invoice discounting/factoring. Where a supplier has such an agreement in place it is likely they can get immediate funds as soon as they generate the invoice. This means that if they urgently need money to pay wages they have just got to get an agreed order and they can get funds for a large percentage of the order value.

Even if a customer is paying pro-forma (up-front) prior to delivery of goods it might take them a couple of days to process the payment, or they will delay until their warehouse is in a position to accept the delivery, but the supplier needs the money immediately.

In an e-commerce world though the case for supplier credit is a lot more thin.

if you can find someone who will factor 100% of debt for a sensible cost if at all I'll give you a prize. Generally its 80% at most. Also there isn't one business I know who wouldn't rip your arm off for upfront payment. I've never had an FD tell me the terms with retailer x are too short!

[anonguest]

I used to work for one of the big UK banks and these supplier finance /reverse invoice discounting schemes were being pushed quite heavily to the supermarkets.

This can actually benefit Morrison's smaller suppliers but the big ones wont like this one bit because they already have access to cheap funds.

Okay so I may not be as business minded as some others here, and may have even misunderstood some of the detail of the above quoted report, but.......how on earth can this be good for any supplier?

In essence the supplier, rather than actually receive what is rightfully theirs in return for goods/services provided to Morrisons, is instead being offered the opportunity to get that money promptly BUT with an interest charge appplied?! Why should they have to do this and think it is good?!

The bank makes money. Morrisons benefit from not being under pressure to pay up as quickly as they should.....but the supplier benefits????!!!!

[olde guto]

I think Sainsbury's made its suppliers wait up to 75 days back in 2012. Wonder what it's like with Aldi/Lidl?

[FIGGY]

I think Sainsbury's made its suppliers wait up to 75 days back in 2012. Wonder what it's like with Aldi/Lidl?

Don't know about Lidl but Aldi are great, proper signed contracts, simple payments and deliveries they are a dream compared to the others

[Guest eight]

Okay so I may not be as business minded as some others here, and may have even misunderstood some of the detail of the above quoted report, but.......how on earth can this be good for any supplier?

In essence the supplier, rather than actually receive what is rightfully theirs in return for goods/services provided to Morrisons, is instead being offered the opportunity to get that money promptly BUT with an interest charge appplied?! Why should they have to do this and think it is good?!

The bank makes money. Morrisons benefit from not being under pressure to pay up as quickly as they should.....but the supplier benefits????!!!!

It's been twenty years now since I worked as a buyer (consumer electrical goods co.) and some of the stuff that went on even then left me embarrassed, frankly. One "innovation" involved little more than writing to suppliers asking them to send us a cheque as a kind of goodwill gesture for being fortunate enough to have us as a customer.

[Rare Bear]

The late Arnold Weinstock started that nonsense years ago to build a cash mountain for GEC. When he retired, he handed over the reins to his successor who spent the cash mountain, borrowed to the hilt and bankrupted the company in a very short space of time.

Not a chap by the name of Brown?

[Gigantic Purple Slug]

The late Arnold Weinstock started that nonsense years ago to build a cash mountain for GEC. When he retired, he handed over the reins to his successor who spent the cash mountain, borrowed to the hilt and bankrupted the company in a very short space of time.

If I was a shareholder I wouldn't want a business I was in to stockpile "mountains" of cash. A business should have enough cash to weather a reasonable storm. Anything else should be returned to shareholders if the business lacks the imagination or ability to invest it in greater profit generating enterprises. Any cash mountain that resides in a business is also at risk, so it makes no sense to keep it there.

[Bruce Banner]

Not a chap by the name of Brown?

No, it was this joker....... http://en.wikipedia.org/wiki/George_Simpson,_Baron_Simpson_of_Dunkeld

[Bruce Banner]

If I was a shareholder I wouldn't want a business I was in to stockpile "mountains" of cash. A business should have enough cash to weather a reasonable storm. Anything else should be returned to shareholders if the business lacks the imagination or ability to invest it in greater profit generating enterprises. Any cash mountain that resides in a business is also at risk, so it makes no sense to keep it there.

http://www.telegraph.co.uk/news/obituaries/1402296/Lord-Weinstock.html