Factoring Blog, 22nd January 2016

News from the High Street

Retail

Two items of company news in the last few days ought to come to the attention of SME’s and flag aspects of their own trading and funding.

Firstly, the shoe retailer, Brantano, went into administration yesterday (21st January 2016) with the Administrators now seeking a buyer. With 140 stores and 60 concessions there are now around 2000 jobs at risk, all within a business bought less than 6 months ago by a Private Equity business.

Private Equity businesses work very much to their own agenda and the welfare of the 2000 employees will be a long way from the top of their list of priorities. Notwithstanding the role of Private Equity businesses Brantano had a place on the High St and almost by default many suppliers would have viewed them as a satisfactory credit risk.

It highlights the risks as mentioned in last weeks blog with businesses not covering their customers for non payment/default and taking a potentially business fatal hit in the event the customer goes bust. There’s no merit or return assuming a customer is a sound risk, merely because they occupy many HighSt placements.

Another item of news of interest and consequence to SME’s is the letter sent by Holland & Barrett to suppliers expecting them to pay, effectively, for the privilege of supplying, by reducing their charges.

Large businesses have done this in the past and continue so to do, utilising their size and status (a euphamism if ever there was one) to force suppliers to cut margins. The tactic, whether by extending terms or forcing discounts is fundamentally wrong and the large businesses that undertake these sharp practices are ultimately damaging their own supply chain.