It’s Time to Talk About Fashion’s Poor Payors – BoF – The Business of Fashion

Posted by pbc_admin
on April 03, 2013

It’s Time to Talk About Fashion’s Poor Payors – BoF – The Business of Fashion.

This article is about the UK but it applies internationally.  As a fashion designer and manufacturer, you have to be very careful with the payment terms you accept from retailers.

Gone are the days of accepting Net 30 day terms just to get the order.  Do that, and you’re in big trouble, possibly fatal trouble.  I know a number of young designers who were forced out of business by returned orders.  Retailers can simply bounce the box if you don’t have payment before shipping.  It feels fantastic to write that order in September but it feels awful to sign for that returned box in February.  Cover your behind at all times.  It’s not “Trust No One”.  It’s more like “Trust Very Few”.

So what are some solutions?  Get references from buyers and check them, make sure your sales agent knows the buyer and trusts their payment history, get credit card details from the buyers at the time of writing the order, attempt to get a deposit from the buyers, insist on COD terms (if the references check out, do “COD hold 30 day” terms if required), and approach factoring and asset lending companies and explore your options.

Of course there are marquee retailers that will insist on terms; some will insist on up to Net 60 Days, and you may have to take back any inventory that doesn’t sell. However, the exposure and marketing cache of being carried by certain retailers can counterbalance the financial risk.  But remember these are the minority.

There is a big difference between sales volume and profitability.  A large part of that difference is cash management.  You have to get paid to have cash.  How will you pay your bills?  Pay for developing your next season?  Pay for sample lines?   Pay your sales agents?  Stand your ground and ensure that you are entering a transaction on fair terms.  If you don’t, you may not be around to write those orders next September.

Paul Brindley

paul brindley consults