- Customer Experience and Contact Centre Services
- Webhelp Payment Services
Priscilla Jokhoo, Business Services Director at the Fédération Française du Prêt à Porter Féminin, who has organised the Paris Traffic fashion trade fair for the last three years, began by saying, “Fashion seasonality leads to very long cycles: between the time you create a garment and the time it brings you your first euro – about 18 months – you will spend your time writing cheques!”
Priscilla Jokhoo assists around a hundred brands a year on a daily basis, at each stage of their economic development. Her verdict is clear: “Most failures are not due to a bad product or bad positioning, but occur for two reasons: lack of structuring, and/or too rapid growth. Remember that this is impossible: you can only self-fund”.
Cash flow structure varies according to the stages of a brand’s development. This principle shows, for example, that accounts payable are relatively more important for a young company.
“When you start your business, you will have leverage on accounts receivable, but little leverage on accounts payable. Then, when the company is over three years old and can prove its financial health, it can negotiate with its suppliers, which will reduce its liabilities. But your B2B customers will ask you for payment terms”, explained Aline Abeya, France & Benelux Sales Manager at Webhelp Payment Services.
As a result, cash flow levels vary greatly from one stage to another and may decrease sharply, putting the company in difficulty. Anticipation is therefore essential!
“Your credit ratings are crucial over the entire life of your business. They are issued by the main credit insurers and rating agencies that analyse corporate balance sheets and are connected to national sources of banking incidents and failures. All suppliers throughout the world can access at least one of these sources that gives you a credit rating. You must also make your business social security and VAT payments without delay because they affect your credit ratings”, Aline Abeya recommended.
Another recommendation: send your first balance sheet to the three main credit insurers: Euler Hermes, Atradius and Coface.
“You must communicate with them at every stage of your business life. If you have had to cope with a difficult situation, you must explain the reaons and the solutions adopted,” explained Aline Abeya.
What is the advantage of a good credit rating? It gives you leverage to negotiate with your national and international suppliers. For example, you can try to find a contract-based solution over several seasons: your supplier may then be able to grant you discounts.
Several recommendations involving customers will avoid unpaid or late payments:
And Priscilla Jokhoo added: “In many situations, I have found that certain customers have exploited loopholes in poorly drafted GTCS! You should also pay close attention to your customers’ General Conditions of Purchase (GCP), for example, with respect to returning unsold items”.
Positive leverage effects on your cash flow: in the case of a first order, you should not hesitate to require a deposit payment, usually 30%.
“Your customer can very well understand that you expect him to make a real commitment to your brand, and not just an order “to see how it goes”, Aline Abeya pointed out.
Also note the possibility of granting a 0.5 to 3% cash payment discount.
Webhelp Payment Services manages the accounts receivable as soon as the order is placed. In practice, once you have made a delivery, it is potentially too late, as the payment method or time may not have been appropriate to your customer’s situation.
“Webhelp Payment Services gives you prior recommendations about orders with respect to the country where your customer is located: this is very important because it reduces the risks of non-payment at the order stage. Webhelp Payment Services’ assistance extends to the collection of multi-country and multi-currency funds”, said Aline ABEYA.
On the strength of its experience in the textile market, Webhelp Payment Services has entered into partnerships with financial institutions that rely on its wholesale management services to help brands source and finance their sales.
> To receive the pdf of the “Cash is king” presentation at the 2018 Traffic fashion trade fair, do not hesitate to ask Aline Abeya.
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