Fonterra is changing its policy of delaying payment to trade suppliers by up to 90 days.
The dairy giant will in August return to “an industry norm” of paying small businesses on the 20th of the month following the end of the month in which an invoice is received. . .
Fonterra attracted widespread condemnation in 2016 when it changed its standard payment terms to make suppliers wait until 61 days after the end of the month to be paid. Those terms applied to the likes of tradespeople and contractors and not to farmers who supply Fonterra with milk.
It didn’t apply to farmers but it did apply to the small businesses, some of which service and supply us. Anything which increases their costs and viability poses risks to us but even if it didn’t it’s the principle.
Good businesses treat others as they would want to be treated.
The 2016 move came when milk solid price forecasts were wallowing in the doldrums at about $3.90 and was labelled “classic bully-boy tactics” by former National MP Chester Borrows.
Rob Spurway, Fonterra’s chief operating officer of global business, said Fonterra was revising its stance after listening to what its smaller suppliers had been saying.
“This is doing the right thing. It is about providing them with that transparency and certainty.”. .
Delaying payment was using small businesses as a bank, adding to their costs and adversely affecting their cash flow.
Returning to paying on the 20th of the month is the right thing.
The better thing would have been to do that all along.