"Late payments – the unseen struggle", 6 August 2024

There’s always plenty of talk about greenwashing and 'business-as-usual' in our industry, but there is very little scrutiny of 'payment-as-usual' and how the intentional late payment of bills by textile industry stakeholders can seriously hold back environmental progress in supply chains, says Phil Patterson...

I usually invoice at the start of a month for work carried out in the previous month and I ask for invoices to be paid within 30 days, meaning that my payment terms are officially ‘30 days’ – but it can actually be 60 days if work is done at the start of the previous month.

Most companies will take an invoice via email with my business bank details (essentially all that’s required) and the organisation arranges for funds to be transferred but, increasingly, ‘for my convenience’ I’m now asked to register on the client’s payment system.

In the textile and fashion industry, payment terms are one thing – with 60, 90 and even 120 days being considered normal and acceptable. Payment systems are utterly incredible and, unless someone can convince me otherwise, seemingly designed to add days, weeks and months onto payment delays that are already built into payment terms...

The worst example of cynical late payment that I’ve experienced is an invoice that hadn’t been paid by a UK supermarket after 11 months of polite chasing. After an email to my main contact, where I specifically asked for my invoice NOT to be paid so that I could send it a birthday card, it was paid within 48 hours. Clearly, this company could pay who they want, what they want, when they want – when ridiculed...

It’s about time that there should be a code of conduct whereby the terms of paying out money and receiving money should be equal – imagine bypassing a shop checkout with an armful of clothes and breezing past with a cheery: “You need to register on my system, and I’ll pay you 120 days after I’ve decided if you’ve given me enough information...”

...imagine if you are textile manufacturer with a few hundreds of thousands or even millions of pounds or dollars’ worth of invoices being firstly delayed by systems and then deliberately not being paid for three or four months due to payment terms.

The outstanding cash, that’s legitimately yours, sits in someone’s bank account, when it could be being invested on new efficient textile technology, renewable energy installations, heat recovery systems, and brain power.

The manufacturing industry is often criticised for not adopting current best practice technology and production systems, that could contribute to environmental savings such as halving net water and energy consumption, but is it reasonable to expect suppliers to take out loans because their money is being held in someone else’s accounts?

Delayed payment culture

This delayed payment culture passes right up and down apparel supply chains so you can guarantee that dyers (whose money is held by garment makers) hold onto dye and chemical suppliers’ money – and you can also guarantee that the garment makers (who are holding onto the dyers’ money) are themselves waiting 60, 90 or 120 days for payment from a brand...

There has to be a move to quicker, easier payments for suppliers. We’ve seen a lot of profitable and innovative businesses fail because of cash-flow problems as they simply run out of liquid cash – and conversely – well-run businesses prospering thanks to an injection of (their own) cash...