CONVERTERS GET TOUGHER ON SAMPLE CHARGES, FREIGHT

NEW YORK — The converters have come out swinging.
Five months after saying “enough’s enough” to nonpayment by apparel companies for sample cuts and freight charges and unauthorized deductions, 90 members of the Textile Distributors Association convened again last week to reaffirm the fight against abusive business practices.
“The domestic textile business is an endangered species. We have to fight hard against the things that eat at our profits,” said David Caplan, president of Metro Fabrics, a large converter.
“Many customers are not paying for sample cuts,” Caplan said, speaking of the industry in general. “We can’t let it continue.
His company, he said, has implemented a stricter policy.
“Lately, we have been getting very, very tough about it. When we do, some customers want to cut a deal, but we tell them we just have to be paid for samples. It is an effort that requires constant vigilance and pushing.”
While the attendees agreed in principle at last Tuesday’s meeting, held at Milliken & Co.’s offices, several questioned the wisdom of “getting tough” with manufacturers who place large orders, particularly when competition is as fierce as it is. But Caplan was insistent.
“Even for a customer that buys $500,000 or $1 million worth of goods, I still demand payment for samples. One has nothing to do with the other,” he said.
Some executives said they have been able to negotiate some form of payment with manufacturers, built sample costs into prices, or closed out certain accounts entirely.
“I found that I had to take the issue directly to the higher-ups, not the designers or lower-echelon people,” said Al Fenner, president of Malibu Fabrics, another converter. “Since I’m a basics supplier,” said Fenner, “I worked out half sample payments with my [established] accounts, which was the best I could do. In basics, they can just get it from somebody else. With new accounts, paying has been our policy, and we have been following through.
“We have also firmed up our stock goods prices, where we are holding the line. The customers don’t know it, but they are paying more. In some cases, we have closed accounts. Those people call and call; they can’t believe we won’t sell to them. But we have to maintain our integrity.”
Martin Tandler, president of Tandler Textile and the TDA, noted that a converter’s product mix is important.
“It’s a lot easier to demand payment with fancy goods,” he said. “We have tightened up since the first meeting, but we have a long way to go. We’re probably going to lose some customers because of it.”
Symphony Fabrics attacks the problem with a preemptive strike. “We make our sales representatives personally pick up the tab for unpaid samples,” said Seymour Schneiderman, president. “Our salesmen know who those people are and are not going to sample them. We’re flexible about a lot of things, but we’re rigid about that. A salesman is going to be more selective if he knows that he’s going to have to pay for it.”
Schneiderman pointed out that there is a competitive advantage, too. “[Because of the cumulative effect of nonpayment], I think that the guy who doesn’t give away samples is going to be cheaper on price than the guy who gives it away,” he said.
Like free samples, apparel makers have come to expect fabric suppliers to pay for shipping. The problem, while no less onerous than nonpayment for sample cuts, has been more easily remedied.
“We add 5 to 10 cents per yard to the selling price of fabric,” said Tandler, a comment that met with some assent.
“We do as well,” said Schneiderman. “Just add it on.”
Claims against orders are a part of doing business, but converters claim that apparel manufacturers and retailers have made an art of unauthorized deductions and chargebacks.
Robert Moss, a sales consultant with Creditek, a national receivables outsource company, told the meeting, “You must take a proactive approach to collecting. We know that the big retailers and manufacturers just aren’t going to return phone calls.”
Converters, Moss said, frequently are outgunned when it comes to receivables.
“If you give people an inch, they’ll take a yard,” he said. “Wal-Mart’s vendor guide is 700 pages long! Whether it is called a shortage or freight delay or return, they have unlimited ways to claim.”
Moss said the most effective way to collect is to contact customers soon after the claim, with ample documentation to support your case. “Manufacturers and retailers know who is staying on them,” Moss asserted. “We have found that they’ll pay if you show them that they need to pay. There is always room for negotiations. Credit managers have autonomy, but you’ve got to have paper. And you have to be timely. They won’t even consider it two years later.”
Of late, Moss said, the textiles industry is seeing an increase in the number of unidentified deductions. “Manufacturers know you don’t have the manpower to check everything out, and they realize that unauthorized deductions are a small percentage of all deductions, and that they will probably get mixed in with the authorized ones.”
Attendees again called for factors to be more involved with collections, and Tandler said the TDA plans discussions with factors in the coming months.

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