It’s time for payment again at the end of the year!
After experiencing a difficult 2022, as the annual holiday approaches, the textile industry has gradually entered the final stage – payment collection. 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 “knot” to solve in the textile industry. In years of poor economic conditions, the problem of “difficulty in collecting payment” will become even more prominent!
Under the “cold winter” of textiles, bill deadlines are forced to be extended
According to data from the National Bureau of Statistics, from January to November, the industrial added value of textile enterprises above designated size fell by 1.5% year-on-year; total profits were 176.5 billion yuan, a year-on-year decrease of 26.4%; the industry’s loss rate was 22.7%, a year-on-year increase of 3.8 percentage points. The output of yarn, cloth and clothing of enterprises above designated size decreased by 6.9%, 6.1% and 3.4% respectively year-on-year, and the output of chemical fiber decreased by 0.1% year-on-year.
It can be seen from the data that in the context of continued weak terminal demand, the textile and apparel industry is not only hindered at all levels in terms of exports, but even the performance of domestic sales with amazing consumption power is unsatisfactory. With more monks and less food, the price war in the industry has intensified, and profits have continued to shrink, leading to an expanding trend of corporate losses.
As an intermediate link, fabric companies are undoubtedly facing tremendous pressure. Because its downstream links are almost all sold on credit, but the purchase of raw materials requires cash. In this way, the fabric company is “taking the worst blame” and “taking the most orders.” As long as there is a problem in the downstream link, it should be Collections can easily turn into bad debt losses. As for bringing money to pick up goods, it is almost non-existent when everyone is short of money.
As market competition becomes increasingly fierce, in order to win more orders, fabric companies are forced to extend their billing deadlines. In the sales process, in order to reach a deal, some salesmen will take a low profile regarding transaction conditions, especially payment recovery.
According to incomplete statistics, since 2022, the payment arrears cycle of fabric companies has generally been extended by 1-3 months compared with previous years.
The right to speak may determine the difficulty of repayment
Arrears of payment are basically unavoidable in the textile industry, and even many fabric manufacturers have silently accepted the market logic of “no arrears, no business”. However, the editor found that in the transaction process of some in-demand products, “delivery upon payment” has gradually become the mainstream. After all, the price-performance ratio of the product is important in every transaction, but the quality of the product itself and the overall service experience cannot be ignored either.
Today, the textile market has slowly transformed from “one-way choice” to “two-way rush”, and buyers and sellers have equal rights to choose. Due to their high added value and obvious differentiation, fabric products are more irreplaceable in the market, which to a certain extent can increase the company’s voice in transactions. Such companies have greater initiative in selecting customers and can naturally better control the amount of debt owed.
A fabric company that specializes in new product research and development said that in order to alleviate the difficulty of collecting payment, for many hot-selling new products, we will directly require new customers to pick up the goods in cash, and we will also screen out some old customers who always default on payment, so as to effectively control the end of the year. In order to overcome the pressure of repayment, we strive to create a healthy business model. In the face of a complex and ever-changing market environment, maintaining a “rather lacking than excessive” attitude when selecting customers is also a means of self-protection.
Although the credit sales trend in the textile market cannot be completely changed, from the feedback from the above-mentioned enterprises, it can be seen that enterprises that follow the past are relatively more passive in the textile market and are more likely to be “led by the nose” by customers.
Postscript:
From the current point of view, textile companies will not “lay down” and wait for the New Year, and the focus of work has gradually shifted to clearing accounts. After all, in an era of high costs and thin profits, if those arrears of payment “disappear”, the company may face the dilemma of “working for nothing for a year.”
As the new year is approaching, textile bosses all lament: What can be the solution to their worries if the payment for the goods has been cleared!
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