At the end of the year again, the textile market began to stage a “repayment” war. At the end of each year, “payment collection” is the most important task for textile workers, and it is also the most difficult task. The most retweeted pictures and texts seen in Moments are all kinds of debt collection and debt collection. Manufacturers have also begun to take delivery of goods with payment, and have ended the business of picking up goods for arrears.
Textile companies start cash delivery
As early as mid-December, many weaving factories issued notices to “suspend arrears business” and all orders were taken in cash. This week, printing and dyeing factories also began to cancel monthly settlement and “cash pick-up” services.
The market suddenly picked up in December, which caught some textile workers off guard. Some factories have been shut down for holidays in November. The sudden increase in orders has meant that for some conventional products, the large inventory can stop production for several months. But for some more special specifications that require custom weaving, it will be more difficult for factories that have stopped production. However, for now, the early holidays are mainly for some manufacturers that produce conventional gray fabrics and basically do not make custom orders, so their sales will not be affected after they stop production.
Whether it is a manufacturer that has gone on holiday or is still producing normally, repayment is very important. Even if the holiday is taken in advance, workers’ wages must continue to be paid in order for workers to return to work normally next year. Enterprises that are still producing also need more cash to turn over production, so the current focus of the textile market is only “return of payment”.
The order payment cycle has been extended this year
This year, under the impact of the epidemic, the arrears cycle of orders has also been extended. The payment cycle in the domestic trade market has always been a pain point for textile companies. It has high variability and extended cycles have become the norm. According to research, the payment collection cycle for domestic trade in previous years generally ranged from 1 to 3 months, but there are also some longer periods, such as 3 to 6 months, or even 1 to 2 years or bad debts. This year, the payment cycle may be extended by at least one month, or by several months at most. Even foreign trade, which has always had stable payment collections, has experienced extended debt periods.
A foreign trade textile person said: “I made several orders for export to Bangladesh this year, all of which were made with letters of credit. It seemed that the payment was guaranteed, but after the expiration of the letters of credit, the customers kept refusing to accept the orders, and there was nothing they could do about it. The letter of credit takes 120 days or 4 months, and the acceptance has been delayed for another 3 months. It has been more than half a year and it has not been returned yet.”
Over the years, many suppliers have made large batches of payments at the end of the year, but there are also individual bad debts. Because of the existence of such old people, textile bosses also began to screen customers when receiving orders, and only selected some high-quality customers. The so-called high-quality customers are those who have received better repayments in the past. There is a saying circulating in the market that “the debt business in the coming year depends on the speed of payment this year.”
The textile market is not good this year. All downstream textile trading companies lack orders and profits are not ideal. In the domestic market, due to excessive clothing inventory, sales this year were lower than expected, resulting in reduced cash flow. Garment factories defaulted on payments to fabric merchants, and finally fabric merchants defaulted on payments to gray fabric merchants.
During the interview and research, the editor also found that there are still many companies in the market that do not sell on credit. On the one hand, they have a strong “right to speak”, and on the other hand, there is no shortage of orders. And the secret to satisfying both is the product! With better products, especially new self-developed fabrics, the competitive advantage is strong enough and the products are difficult to be replaced. Naturally, it has the right to dominate, instead of being “led by the nose” by customers. In general, both dyeing factories and customers have really felt the scarcity of orders and shrinking profits in the market surrounded by the epidemic this year.
But the more difficult the industry is in, the more important it is to consciously collect money! Especially when the epidemic spread this week and many companies were still forced to suspend operations, repayment becomes even more important. Finally, we call on people in the industry to consciously return their money and take annual leave as soon as possible!
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