Music and missed payments don’t mix.
Specifically, supply chains of even the most local sort can feel the pinch from delayed or non-existent payments from buyers. In Oregon, and as reported by The Statesman Journal, the Willamette Country Music Festival may be canceled in future years amid widespread late payments to that festival’s vendors.
The publication reported a series of suppliers have yet to be paid two months after the event was last held, as noted by Roger Nyquist, Linn County Commissioner. In one example, police departments have said that they will not provide security to the event as a local sheriff’s department has been owed $78,000.
One vendor at past festivals, who sold nuts to concertgoers, said that the company that operated the festival, as well as others in the region — WCMC, which in turn is owned by IMG — allowed vendors to keep cash proceeds from sales. But they also had to use systems owned by WCMC to record credit card and bracelet sales, and were supposedly to receive their payments after the festival. He said that many vendors are owed thousands of dollars on those sales.
Many of those vendors have filed fraud complaints with the Oregon Department of Justice. The Statesman said that officials there were not able to state how many complaints have been lodged as the processing period typically takes several weeks.
Separately, the fallout in the United Kingdom tied to the fall of Carillion continues. The publication Building reported that there is a human cost to the impact of the firm’s bankruptcy. The publication interviewed Richard Dors and James Sinclair, the founding directors of Dancourt, a 15 million pounds in annual sales construction firm that went into voluntary administration earlier in the year. That duo stated that the firm had been in operation for 16 years but went into administration after being owed 2.6 million pounds in late payments from contractors and then had to let staff go.
That firm’s travails, said Building, are a “microcosm of what is going on up and down the country.” As many as 780 construction firms have become insolvent in the first quarter of the year, which is 20 percent higher than a year ago. All told, there have been 2,764 insolvencies of construction firms in the past financial year. Testimony by a number of smaller firms across the sector to parliament shows that companies have become conditioned to expect payment terms of more than 70 days. Said one executive to the committee hearing about conditions within the construction industry: “Over the 31 years I’ve been in the industry I’ve probably worked for 100 different clients. I can count on one hand the number of clients who will actually abide by the terms of the contract with no fuss, no nonsense, and pay you on time. If I was to walk away from 95 clients, I might as well go and claim benefits somewhere because I wouldn’t be working for anyone.”
In Kenya and Romania, Late Payments, Too
In Kenya, The Star reported that delayed payments by both government and corporate entities have been “killing small and medium enterprises.” That statement comes from a bank official. Karen Kiambi, who heads enterprise and supply chain development at Barclay’s Bank of Kenya, said that companies have not been able to gain access to funding from commercial banks. The SMEs have been hurt by caps on lending.
“SMEs lucky enough to be considered for supply contracts with big corporate organizations have had to grapple with delayed payments after delivery of goods and services,” she said.
As noted by The Star, central bank data has shown that gross non-performing loans were up 48 percent last year. At the same time, SME financing needs to change, said the bank executive.
In Romania, as reported by Business Review, businesses maintained the same payment terms in reference to timeliness of payments that had been seen last year. The data come from an EOS study titled “2018 European Payments Behaviors” that had been done by the Kantar TNS Infratest Independent Market Research Institute across 3,200 companies. In 2018, 68 percent of B2B customers have maturities of at least 40 days, said the report.
Amid the headlines surrounding the possible Sears bankruptcy, Reuters said at the end of the week that at least some suppliers have not been paid by the beleaguered retailer. As has been widely reported, the company had been seeking to secure financing, while banks had been balking on those efforts. Lenders include Bank of America and Wells Fargo. Suppliers have tightened invoice terms or have cut down shipments.