Payment terms changed.....to 120 days??

[CarbideBob]

I wonder how Eaton is on payment dates.
What is the actual cost to the supplier so how much to change price by?

Here is how I look at. net 30 to net 120 is two months. This means I have to borrow money to pay bills.
My current line of credit is around 9% so that is 1.5%.
Extra work on my end so add another 1% to pay my people.
I have lost access to cash that should be sitting somewhere making money so another 0.5%.
9% per year profit for being the bank so +1.5%.
Total is 4.5% and I have turned my AR department in a money making machine just like a VMC.
I can break even at 2%.
Should also mention that once you master carrying a big AR the banker guys get nicer to you when you want a $600,000 loan for a new machine.

I remember when GM went from net 10th and 25th to 2nd day of 2nd month.
All us vendors in an uproar, everyone said I will not put up with it and go elsewhere.
Guess what happened... nobody jumped ship.
Good thing was in that now you could set your clock by the date and time a check would show up so no phone calls and no worries.

Much worse was the new concept of a price reduction for every new year that you held a job.
Many creative ways where invented to get around this mandate.

Two hotshots in the manufacturing world started this mess. Welch and Lopez.
It is a game but if done right you can make money at it so maybe not all bad.

One thing I have always fought doing is credit cards. Giving away money every transaction for no reason.
It likely makes sense for Mari but that money has to be put in the price tag somewhere.

Every business and shop is different.
I know this a hit. Before going crazy do the math to the penny as to how it may work.
If you hit your available credit and wonder how to make payroll or tax deposits ..... I've been there and know very well just how bad life gets.
Bob

 

[DanielG]

I don't like COD terms, they're a pain. Either send me an invoice or take credit cards. With COD I have to be there when it shows up and it takes time out of my day not on my schedule. If you do COD via UPS, they charge a hefty fee to handle the transaction on top of being a pain.

 

[dkmc]

Considering any machine shop worth its salt has been busy as the last few years, sounds like Eaton is digging a hole for themselves.

To make up for the Net 120 bullshit, current suppliers will just up their prices 10-25%. And most new suppliers will tell Eaton to pound sand.

ToolCat

As things dwindled down, I was doing 2 different but similar parts for Eaton. I'd get one order for 50-ish pcs every year, or every other year. Terms were Net 45 and sure enough there would be some problem with electronically submitted invoicing, and/or recognizing my bank info per their 'supplier' system online. Or the order would not show as received. (delivered not shipped) I'd have to make 2-3 phone calls every time to get someone to 'fix' the problem so the invoice would be accepted into the system. Or so the system would submit payment to my bank. So net 45 mostly was net 55-60 by the time payment finally showed up via electronic deposit. Because of this, they essentially were paying $18 for $8 parts. "Problem customer" pricing applied in full.

My inclination would be, if a PO ever materializes again, rather than 'tell them off' about their ridiculous terms, to simply 'update pricing'. I think I would change the price to $36 each and see what happens. Material cost is minimal, and I probably even have some on hand. I might just be willing to wait 4 months at that pricing level. At least once as a test anyway. Always before I've fired a customer, I've first applied 'problem customer' fees. Most times it's worked out OK, but a few times it still wasn't worth it.

 

[triumph406]

It's always amusing reading these threads

For every shop that is strictly COD, for every shop that demands and gets 30 days net etc etc, there's 50 shops who will accept 120 days, they may not like it, but they will.

Not sure what Boeings terms are now, but I knew several shops around Kent WA who were at 90 days net with Boeing 5-6 years ago.

OK Boeing is now at 120 days

Boeing slows payments to suppliers as it accelerates cost cutting

Boeing Co <BA.N> is stepping up efforts to conserve cash, cut costs in its supply chain and trim inventory of parts in its factories, telling vendors it will take longer to pay bills, Boeing and aerospace industry executives said.

www.reuters.com

So if Boeing is at 120 days, and still able to make planes, evidently there's a lot of shops seemingly accept the inevitable.

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I suspect as in life, what's said here, and what's done in reality can be two different scenarios.

 

[Corolla]

Invoice factoring is a huge no no in my opinion.

If you take credit cards, you are invoice factoring UNLESS you charge your CC fees upfront.

I looked at both and decided invoice factoring at 1.5% is cheaper than 3.0% CC fee. Everyone does their own thing though.

We did not take CC for years UNTIL we were legally "allowed" to add the fees and show them on the invoice. Some customers opted to pay upfront when they bought merchandise to skip the additional CC payment, and those on NET30 paid on time.

Factoring is painful though, as someone said earlier. The late payment gets sent back to you for collection, and the payment fronted is withdrawn. Helps to provide "focus" on the later payment people though.

Choose your customers wisely; and pay attention to them. If their business is getting bad, you will be right behind them if you are not careful.

 

[SND]

Debt slaves are usually not in much of a position to call the terms nor able to walk away.

Pro Tip: Stop being a debt slave. The last 3 years were a fantastic opportunity for most to get on top, if you missed it, you probably won't like what comes next.

 

[Ox]

What's next?
Being Janie Baker's love slave?


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Think Snow Eh!
Ox

 

[triumph406]

Debt slaves are usually not in much of a position to call the terms nor able to walk away.

That's the problem when you do a lot of Aerospace work, you get inexorably sucked in. I would assume all the airframe makers are at 90-120 now, so if you don't like say Boeings terms, what you going to do, go to another and get 120 day terms?

The only aerospace work I've done recently is inspection tooling for a satellite company, minimal paperwork (shipper and a CoC) so not the reams of paper normally required, andI get paid either with a CC (less then $3K) or in 30, I should consider myself lucky I guess.

The last 3 years were a fantastic opportunity for most to get on top, if you missed it, you probably won't like what comes next.

Unfortuantly not the case for a lot of shops in the aircraft industry

Covid slowing aircraft orders put two of my PNW customers out of business, And to add insult to injury there was the 737 MAX debacle. Used to enjoy going upto the PNW on a monthly basis, haven't been in two years, probably never again for business.
Got to say I don't miss not working on Boeing tooling anymore, Boeing tooling designers, couldn't think of a more inept f'd up group to deal with.

The large aerospace shop over the parking lot went from 2 shifts, to one, the half a shift. in the space of a month at the beginning of Covid They seem to be back to one shift now.

. The last 3 years were a fantastic opportunity for most to get on top, if you missed it, you probably won't like what comes next.

The last two years at the shop were probably my best,certainly the most profitable more due to luck then anything else. Everything else in my life has been a complete train wreck.

As for what's coming next? I have a couple of 'friends' working on a product that's going to put my main customer out of business, their going to send all the manufacturing to China, so I'm going to get screwed. As my brother always says, you want a friend, get a dog

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Now this hot dog cart idea is looking even more attractive.

 

[SND]

What's next?
Being Janie Baker's love slave?


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Think Snow Eh!
Ox

Most likely destroy as much of the little people's "wealth" as possible and bankrupt a lot of them until they're begging for the great reset and the regime's CBDC's to save them. My bet is that none of the last 3 years was an accident and all just part of a bigger plan still unfolding.
If I'm wrong, at least I'm ready for what most aren't.

 

[neilho]

Most likely destroy as much of the little people's "wealth" as possible and bankrupt a lot of them until they're begging for the great reset and the regime's CBDC's to save them. My bet is that none of the last 3 years was an accident and all just part of a bigger plan still unfolding.
If I'm wrong, at least I'm ready for what most aren't.

Little bit of a conspiracy theorist, are you?

 

[DouglasJRizzo]

I had similar from a large corporation. Yeah, great for them, "what" exactly do I tell my suppliers, tho?

 

[david n]

Little bit of a conspiracy theorist, are you?

So? Folks with views outside the "norm" have been more right that wrong lately...........................

 

[wheelieking71]

Most likely destroy as much of the little people's "wealth" as possible and bankrupt a lot of them until they're begging for the great reset and the regime's CBDC's to save them. My bet is that none of the last 3 years was an accident and all just part of a bigger plan still unfolding.
If I'm wrong, at least I'm ready for what most aren't.

Unfortunately you are not wrong. "The plans" have been at play for a very long time. Too bad more people are not willing to do the research. It is all well documented if you dig deep enough.

 

[SND]

Little bit of a conspiracy theorist, are you?

Conspiracy Scientist actually.
We've been right about everything so far the last 3 years.
You're welcome.

 

[Ox]

I've not heard that term.

Is that somewhat different than Q?


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Think Snow Eh!
Ox

 

[Milland]

So? Folks with views outside the "norm" have been more right that wrong lately...........................

"Right", in the manner of Faux Nuz", inventing what their paying customers want to hear while whining to their fellow purveyors about how they're so alarmed of the lies they're telling?

Odd that so many will listen to an outlier source, while convincing themselves the rest of the world is in on the conspiracy to take their precious bodily fluids...

 

[Milland]

Unfortunately you are not wrong. "The plans" have been at play for a very long time. Too bad more people are not willing to do the research. It is all well documented if you dig deep enough.

I've got a counterpoint - how about you stop voting in folks who'll tell you all the things you want to hear, then pass laws that benefit their rich backers.

It's time we opened our eyes a bit - when a rich man tells you he loves you, hold onto your wallet. A little simpler and more likely than a global conspiracy, eh?

 

[Ox]

"Right", in the manner of Faux Nuz", inventing what their paying customers want to hear while whining to their fellow purveyors about how they're so alarmed of the lies they're telling?

Odd that so many will listen to an outlier source, while convincing themselves the rest of the world is in on the conspiracy to take their precious bodily fluids...

I think there's enough on both sides.
Same thing / different....

One side believes anything the G man tells'um.
The other side doesn't believe anything the G man says.

Now, if we could just git everybody to at least not outright lie, maybe we could filter out the spin from there?


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Spin Doctors
Ox

 

[doug925]

Just got an email from a dormant customer. I find it interesting that the tone makes it sound like it's a good
thing for them and their customers. Screw their suppliers....
Time for the small vendors to become their own finance corp I guess?

March 1, 2023 EATON Payment Terms Standardization. To align with our customer expectations, industrial peers and competitors and maintain our business competitiveness, we are continuing to standardize our suppliers’ payment terms to the Eaton standard 120-day term or country maximum allowed. Beginning May 1, 2023, we will change your Eaton pay term to the standard 120-day term or country maximum allowed. This change will apply to all existing open purchase orders, blanket orders, and supplier schedules. For more information about Eaton’s standard pay terms, please review our global purchase order terms on Eaton’s selling to us website. We appreciate the continued opportunity to do business with you and believe this 60-day notice provides adequate time to plan for this change.​

That is a big NO F'en WAY!!!!!

 

[doug925]

I've had that experience. Weatherford (yeah I like to call them out by name, they can fight me in the parking lot if they don't like it) stretched us out to 9 months! It's literally criminal as far as I am concerned

Yeah, Weatherford thinks 120 days is the way to go.
I fired them when they pulled that !%$@ on me.

One of my ex customers was a 'Unique' company that sells direct to Oceaneering, as I don't have a Vendor # for them.
They strung me out for almost 9 months before we got paid.
They were fired as a customer, forever.
Oceaneering now wants product directly from me, but using C.C. and not giving me a vendor #
That is fine with me. I just tack on 7% to cover CC & QBO fees.

Doug