Fonterra unfair short term thinking

Fonterra is again being criticised for being unfair to businesses which service and supply the company :

Fonterra has extended by two months the time it takes to pay suppliers, from 30 to 90 days, saying that matches what it does in other countries.

It has also asked them to cut their charges, which it says is about boosting efficiency.

But the suppliers are hitting back, warning Fonterra risks a backlash in the provinces.

National’s Whanganui MP Chester Borrows said the cooperative had asked for a 10 percent cut in what suppliers charged it, but was now asking for 20 percent in some cases. . .

When times are tough it’s normal practice to ask companies you do business with to sharpen their pencils but there are consequences if you’re too tough:

The supplier, who did not want to be named, said Fonterra was generating animosity and rupturing relationships going back years.

“A lot of the businesses break their backsides, we put ourselves out, we give them priority – well, that loyalty is disappearing,” the supplier said.

“A lot of contractors won’t give the same loyalty and drop everything to help them out when their plant goes down, because they are not good creditors.

“The other thing I say is because they are paying their bills three months late, that scares me – what guarantees does Fonterra give all their creditors that they’re good to pay their bills on time?” . . .

A friend in PR tells me the practice of expecting 60 or 90 days credit before bills are paid isn’t unusual but she’s able to invoice before work is finished. That isn’t possible with, for example, electricians who are called on at short notice when something goes wrong.

When the milk price is so low we expect the company to become more efficient but doing so at the cost of other businesses is short-term thinking.

In our business we treat people as we want to be treated. Fonterra should do the same.