in transaction
Which is more important, order volume or payment cycle?
? ? ?
Getting the money is the most important thing!
Textile people should have risk prevention awareness
Have the courage to break when necessary
Ability to respond quickly when encountering problems
Good problem solved!
Recently, there has been an “infinite loop” between price and payment. That is to say, the customer lowers the price and finally has to negotiate a profit to seal the order. However, the customer still has to default on the payment for a long time. The textile boss has poor cash flow and has to cut the price and sell the goods. In this way, in the end, it becomes a profit reduction and a price reduction, no money is made, and the payment cannot be recovered!
Oh, what a painful realization this is!
A boss who owns 160 water-jet looms said: “It is really difficult to get payment this year, and the arrears are serious. I started asking for payment at the end of July, and by the beginning of August I received one payment! Due to poor payment last month, this month The only option is to sell the goods in cash.”
Everyone has found that no, many times debts are formed slowly. Let’s look at a real case to see if you have also experienced such a “bad” customer:
A textile factory in Shandong contacted a new customer. After several cooperations, the customer responded quickly and was very satisfied with the factory’s products. The cooperation between the two parties was pleasant.
As a result, when another order was placed, the company made a monthly payment request to the textile factory.
And promised to continue to place many large orders for the factory for a very long time in the future, and the two parties will establish a long-term cooperative relationship.
For a small business like this textile factory, this promise is extremely attractive – it means they may have a long-term, stable and large customer!
Considering that in the previous cooperation, the other party paid very quickly, and many orders did have monthly settlements, and there were no problems. Therefore, the factory resolutely accepted the “monthly settlement” cooperation model with this customer.
Who knew, this would become the beginning of a nightmare!
After the cooperation model was determined, the company began to place large orders with the factory.
This is a phenomenon that this textile factory has never seen before. The workers are very busy, there are a lot of materials to buy, and because it is a monthly payment, they cannot ask for any deposit… They can only ship the goods with the best quality and wait for the customer’s payment.
In the first two months, the other party’s payment was quite on time, but starting from the third month, the payment has been delayed again and again…
The other party used all kinds of sweet words to deceive them, such as: “I was away from the factory on a recent business trip”, “The finance manager was sick and hospitalized”, etc. In many cases, the payment slips provided were even fake!
But the other party’s monthly payment was not on time, but they required the textile factory to ship the goods on time!
The textile factory is already in a very passive position at this time: if there is a stalemate with this shameless customer, if the other party simply does not want the remaining goods, cancels the order and runs away, then all the large payment they have not received before will be lost. Water drifts.
Every time before placing a large number of new orders, a small amount of the previous payment will be given to fill the debt. Compared with the total debt, it is simply a drop in the bucket. But at this time, the textile factory is already in a difficult situation!
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Although I didn’t want to continue shipping, in order to maintain the cooperative relationship and recover the payment, I had to compromise and ship to customers again and again.
Later, the amount of arrears accumulated increased. But no matter how hard and soft the factory tried to pursue the debt, the other party had no intention of repaying the debt.
As for the textile factory, due to a serious funding gap, it cannot afford wages and money to buy materials, but it is in danger of going bankrupt at any time!
The debt cycle continues to lengthen. Without debts, there will be no business.
The current textile market environment is not in good shape, and the phenomenon of “getting goods on arrears” is becoming increasingly serious.
This year’s accounts receivable situation has increased significantly compared with last year, with the proportion rising from nearly 20% to 50%. “At this time last year, our billing period was about 1-2 months. Recently, it is about 3 months. Some old customers have longer periods.” A textile boss said.
How to prevent and control risks
1. Conduct credit investigation before transaction
It’s still a commonplace credit investigation issue! There will always be countless people who easily relax their vigilance! You know, even if you are an old customer who has been doing business for a long time, there is no guarantee that your company will never have problems.
2. When it’s time to cut it off, don’t take chances.
When there is a customer who defaults on repayment, you cannot take chances, let alone leave the decision-making power in the hands of the other party. Once the debt reaches a certain value, it should be cut off immediately and negotiate with the customer immediately. If there is no clear plan for repaying the debt, no more shipments will be made.
3. GraspDebt collection time
International practice shows that debts that are overdue for more than 90 days are considered bad debts, and 1-3 months is the best period for collection. At this time, the buyer’s willingness to repay is the strongest, and the longer the delay, the more difficult and slim it will be to get the money back!
So, is the market lacking money or confidence today? After getting in touch, I found that many textile bosses are “double deficient”! Under the influence of various situations, there are no orders, high inventory, and terminal demand is in a mess.
Textile bosses should still be vigilant and guard their own pockets. After all, making money is not easy. The issue of receivables has attracted enough attention. Customers with low credit should be cut off when necessary, otherwise it is very easy to end up with both money and goods!
Please remember that instead of selling goods in arrears, it is better to sell goods in cash. The most secure thing is to have the money in your own account!
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