Suddenly the autumn wind comes all night! Recently, the temperature has dropped sharply across the country, and the weather has suddenly become cooler. Most areas in northern my country seem to have entered winter overnight, with temperatures already below 10°C. According to the weather in the north, winter clothes will soon appear on people. Affected by this, the weaving market did undergo subtle changes this week.
Orders for cold-proof fabrics in foreign trade markets such as North America and Europe have increased slightly. Domestic online e-commerce autumn and winter orders have also begun to be placed, mostly for jackets, down jackets, cold-proof clothing and bedding. Feedback to the weaving market is that the sales of gray fabrics for autumn and winter fabrics are heating up, and most of them are conventional models with fine denier and elasticity.
Enterprise refuses to accept orders with outstanding payment
Seeing the market heating up, the weaving boss was not happy, and he also refused the orders he received! what on earth is it! ?
According to feedback from a certain cloth boss, all orders for the second half of the year will be paid in cash and no credit will be given! Because old customers have formed the habit of getting goods without payment, all orders from old customers have been refused. “Old customers don’t accept cash. They can only say that they don’t have the goods and refuse to accept them. Especially in the second half of the year, the number of orders will not be small, but if you are in arrears to get the goods, the financial pressure will become greater and greater. In the end, only the ones who will die will be Himself. So our current sales idea is that we are willing to sell at a low price and lose money, but we also want to receive cash.”
Credit sales are becoming more and more serious
The cycle of credit sales is also related to the market. Generally speaking, when the market is good, like 2017 and 2018, under the “once-in-a-decade” market situation, many textile bosses reported that supply exceeds demand! Most customers queue up at the factory gate with cash, so there is no credit sales at this time. But in 2019, the market sentiment began to decline. Customers said that funds have been tight recently, so they should take care of them and take the goods away first, and then check out later. But after the customer leaves, it’s a long road to pay!
Due to the impact of the epidemic this year, both domestic and foreign trade have been severely hit, resulting in a scarcity of orders in the textile market. The textile market is already in a serious imbalance between supply and demand. At present, the inventory of most weaving manufacturers has reached a high level of more than 2 months. In an environment where there is a lot of food and a shortage of food, once there is an order, each manufacturer will try their best to seize it. They can only sell on credit. Sold on credit. And the debt payment cycle is usually around 3 months, and sometimes even more than 3 months. Now when the editor visited the market, many gray fabric manufacturers and traders said that there were still millions floating outside.
When the market is bad, weaving mills and traders have less say. In order to receive orders, they can only allow customers to sell on credit. It is precisely because of this mentality that traders’ credit sales have declined.
Cash flow determines life and death
But for weaving companies, hundreds of thousands of funds are floating around, and a steady stream of capital investment is required to ensure the operation of the factory. Without strong financial strength, no one can sustain it. In reality, it is often seen that companies that are usually doing well suddenly declare bankruptcy. Many of them have cash flow problems. For example, if a company sells gray fabric for 10 million yuan, but only gets back 1 million yuan, then the company will have a shortfall of 9 million yuan. This 9 million shortfall will burden the company with personnel wages, product costs, etc. If things go on like this, the more it sells, the faster it will die.
This shows the importance of cash flow. In short, cash flow is crucial to a company and determines the survival of the company to some extent. The better the cash flow of a company, the stronger the company’s ability to resist risks. With enough cash flow, the company can reserve enough operating funds. When risks come, it will have enough funds to deal with them. There are companies in all walks of life with very strong cash flow. What these companies have in common is that they have a strong say in the market. For example, if a trader wants to get goods, he must place an order and pay a deposit first. When picking up the goods, he must give full payment, otherwise he will not get the goods.
Today’s textile market is indeed plagued by credit sales. Not only that, prices are also very chaotic, and price wars are everywhere. These bad habits will only hurt weaving companies in the end, so the editor believes that it is a wise move for companies to refuse credit orders, and I hope more companies will follow suit!
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