Operators are calling for action against a rise in clients demanding extended credit terms, MT has learnt.
Operators report some clients demand credit terms of up to 120 days, while others try to lock prospective suppliers into agreeing 60-day credit terms as a condition of com-pleting electronic tenders.
Bullet Express MD David McCutcheon told MT the problem is on the rise. “We’re having issues with major clients that are extending or requesting credit terms as long as 90 days. They’re using this to increase cashflow in their business.
"I have two clients demanding credit terms of 60 days-plus; one is using a new trick of locking the credit terms in the online tender process at 60 days. The tender process will not let you continue unless you agree to 60 days-plus.”
Condemning the practice as bad for the haulage industry and the economy, McCutcheon called on the government to require firms to register their payment terms at Companies House.
“This would force majors to be better organised and avoid the last-minute queries that suit them and delay payment. Companies would want to be in the red area or risk suppliers adding to their costs to cover for payment term costs.”
Expect Distribution MD Neil Rushworth said the problem generally lies with larger firms using their clout, which he condemned as an outdated attitude. “We have parted company with Fox’s Biscuits after trading with it for more than 10 years on agreed payment terms, only for it to tell us that its payment terms are now 120 days.”
Rushworth said Expect Distribution has taken a firm stance on extended credit terms. “We rarely trade on terms in excess of 30 days.
"We include payment terms in quotations, tender documents and contracts and make it clear that they cannot be exceeded. Over the past three years we have focused on reducing debtor days and we now average 48 days – three years ago we were nearer 60 days.”
He called on hauliers to do more. “We have a choice, we can all put supply on stop if the terms agreed at the outset are exceeded and we can choose how to manage relationships with clients. If the industry follows this approach, customers looking for terms of 60 days-plus will find there’s no supplier to match their expectation,” he said.
