Not long ago, the textile industry was in a storm again!
On the evening of July 5, *ST Xinfang issued an announcement that because it could not pay off its due debts and obviously lacked the ability to pay off debts, but it had reorganization value, Henan Tiangong Construction Group applied to Nanyang Intermediate People’s Court to reorganize and pre-reorganize the company. all. The announcement shows that Henan Tiangong Construction Group has three due but unpaid claims against *ST New Textile, totaling 20.7752 million yuan in project funds.
Although the cotton spinning leader has repaid 1.5 million yuan, the amount owed is still as high as 19.2752 million yuan.
Funds are the material basis for the operation of enterprises. Even leading enterprises will encounter financial difficulties. Is the situation of small and medium-sized textile enterprises more difficult?
Inventories rise, occupying working capital
As the traditional off-season deepens, the textile market has a strong wait-and-see attitude. The delivery speed of conventional gray fabrics has slowed down. Some textile companies are seriously missing new orders and are forced to maintain the operation of their machines in the form of partial inventory production, resulting in a backlog of inventory in the gray fabric market.
Monitoring data from Silkdu.com show that since early June, gray fabric inventories in Jiangsu and Zhejiang have shown a slow upward trend. As of July 7, the inventory of weaving companies in the sample has rebounded to around 36 days.
In the stage of sluggish demand, high inventory is an unbearable pain for textile companies.
If the orders of the weaving enterprise are not enough to support production operations, the excess gray fabric will be converted into inventory, which will inevitably occupy a large amount of funds of the enterprise. Once there is a problem with capital liquidity in the future, companies will usually sell goods at low prices to the warehouse to realize cash, which can easily lead to loss of profits or even loss of profits. In the end, they can only end up as a “dumb man who eats Coptis chinensis and cannot explain the suffering” .
A weaving company said that since June, the inventory of gray cloth has been recovering significantly, and the current inventory of gray cloth is around 2 million meters. Among them, part is excess from early production, and the other part is “inventory” that has not yet been taken away by the buyer.
Although it is normal for weaving companies to have inventory, having an inventory of millions of meters is very scary and is undoubtedly a major challenge to the company’s capital chain.
Repayment encounters obstacles and the cycle is forced to be extended
For a long time, the vast majority of employees in the textile industry have faced the dual dilemma of “difficulty in sales and difficulty in collecting payment”. The problem of payment arrears has always been the most difficult problem in the textile industry.
As an intermediate link in the industrial chain, weaving enterprises have a particularly prominent problem of “difficulty in collecting payment”! Because almost all downstream purchases are made on credit, but when purchasing raw materials, cash is required. In this way, weaving companies have “taken the biggest blame” and “taken the most orders.” If there is a problem with the buyer, the accounts receivable can easily turn into bad debt losses.
At this time, some people will say that it is not easy to reduce the pressure of repayment. Isn’t it just a matter of signing a contract?
It is true that signing a contract is an effective method. But today’s textile market environment is extremely involution. There are not only those who offer price-volume services, but also those who offer refunds. In order to win more orders, some textile companies continue to relax the time limit for payment collection. According to incomplete statistics, the current payment collection cycle of textile companies has generally been extended by more than one month compared with previous years.
A weaving company revealed that in terms of payment repayment, contracts are usually signed for three months, but some customers still delay the payment.
Arrears of payment are basically unavoidable in the textile industry. Therefore, many textile companies have defaulted to the market logic of “no arrears, no business.”
In the era of high costs and thin profits, whether it is inventory or payment collection, the capital chain of textile enterprises is tested all the time. In order to alleviate some of the pressure, those weaving companies with high inventories will choose to reduce production and take some holidays when the high temperature comes, so as to “relax” for themselves. Those with high pressure on repayment are slowly transforming and upgrading, and are working hard to screen customers. After all, everyone is afraid of financial problems!
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