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In this series, we put a spotlight on the unspoken needs of Glass Suppliers, so that glass buyers can trade their exemplary customer behaviour, for the best possible pricing.
Today our countdown moves to Need Number 3 – “Payment Terms”
They say Cash is always King. And never more so than for those publicly owned businesses who are bound to produce and publish annual reports. Share prices, dividends and staff bonuses often swing on just how much cash is on hand at the close of each financial quarter & year.
Most glass suppliers are publicly listed, although in Australia things have recently changed.
Of the two majors, Orora sits firmly on the Australian Stock Exchange whilst the “glass supplier formerly known as OI”, which is Visy Glass, is privately owned. This means that of the two, Orora has a higher sensitivity to the timings of cash flows, particularly those inbound from customers.
There are implications and opportunities here for Glass buyers with both high & low cash reserves.
If your buying from Orora and have managed to secure terms of 60 days, you could look to pay within these terms for the months of May & June. More specially, pay all that is pending in full, by the end of each financial year, so that Orora can report an optimised cash on hand result. And what can you expect in return? Well that is up to you & Orora, but it’s a genuine value that your providing and one that’s going to be appreciated.
The case with Visy is a little different. Private companies keep their commercial cards closer to their chest, but you can generally presume that their sensitivity to cash flow timeliness is less. But what of yours? If cash flow is important & you’d like to defer supplier payments to 120 days, Visy Glass could well be ready to trade you this benefit in return for something important to them, such as exclusive supply!
In many ways these two scenarios provide a signpost for glass buyers of different sizes. If you’re a small winery of craft brewer, you may find Visy Glass more flexible on payments terms. If you’re a bigger producer of food or beverages, Orora might be more appreciative of your ability to put forth payment flexibility.
And don’t forget that we have 2 sizable glass distributers operating in Australia as well. The privately owned Plasdene and SMYA, which is a joint venture between two packaging leaders, San Miguel Corporation of the Philippines, and Nihon Yamamura Glass of Japan.
Anyway, you approach it, I recommend taking the respective Sale Directors of each company out for a round of golf or at least a coffee, and asking them the question – how important is timely cash flow to you? You might just be amazed by their responses.
Buy well & in our next episode, our countdown moves to Glass Supplier Need number 2!
