The only solution to this problem is, sadly, government regulation. It needs to be a breach of law NOT to sign a contract. It needs to be actionable in law without having to jump through hoops NOT to pay within a reasonable time frame or to vary the agreements within a contract without a new contract being drawn up. Where is the Business Council of Australia in all of this? Where are the state Chambers of Commerce? Why are our business enterprise centres which are funded by taxpayers not getting involved? This is a problem of greatly unequal abuse of power and only regulation will restore some balance to the business relationships.
Caron
As a fashion agent, I agree with the no credit policy. Sadly, here is the reality: manufacturers and distributors are first to complain when they don’t get big orders. Having no credit means you will be taking smaller orders and it also means you have to work a lot harder and may take a huge drop in sales. Not to mention if you are manufacturing offshore you may not be able to meet the minimums imposed by makers overseas, most notably China. So as a fashion agent who only gets paid when retailers pay, manufacturers and distributors need to decide ultimately this: do they want to take the risk of offering no credit to getting tiny little orders while risking the fact that retailers will go to someone who can offer credit? Manufacturers and distributors brought this upon themselves when they started offering credit, the only way to fix this is for the entire industry to stop offering credit.
Phoebe Garland
Phoebe, I am in total agreement with you. Ultimately growth of sales is lead by the consumer, but retailers need to take a proactive approach to the prevailing business climate. The comments re: a unified body are already in action. 12 national distributors have formed the Fashion Distributors Association Australia, codified many of our trading terms and launched the trade show Premiere. The response is one of overwhelming support.
Dan Nestel
I am all for a unified front in our industry. However, trading terms does not necessarily mean strong volume orders. And by volume orders I am talking over 20K orders. While it may protect you somewhat, I am unsure how this will benefit your growth of sales. At the end of the day, if someone doesn’t pay their bills no amount of trading terms in the world can do anything about it. If they don’t have the money, they don’t have the money.
Phoebe Garland
Sadly, I believe the problem lies with over supply. There are too many shops selling goods to a population of only 20 million. These shops cannot get the sell through required to pay bills on time.
Julie