Recently, major textile towns have ushered in production shutdowns and holidays. Weaving factories, dyeing factories, and finishing factories have basically stopped, and trucks pulling goods on the road have disappeared. However, almost all the stores in the market are open for business, and even if there are orders, normal production cannot be done at this time. For textile workers who are still holding on, they are firstly waiting for some sample customers to come to their door, and the other key is reconciling the accounts, collecting payment, and paying the processing fee for one year.
Normally speaking, the end of the year should be the best time for a company’s economic status. After all, the payment for goods will gradually return over the year, and the company’s funds at the end of the year will be more abundant than usual. But for textile companies, funds at the end of the year may be the most tight time of the year.
In order to revitalize funds, the property was mortgaged for 3 million yuan
According to a trader, they only have more than 1 million yuan in cash on their account recently, and the foreign trade loan has not yet been repaid. There are millions of dollars that have not been recovered. However, there are a lot of processing fees waiting to be paid at the end of the year, and more than 1 million is obviously not enough. But it is difficult for textile traders like them to get loans from banks. In order to ensure the operation of the company, they had to mortgage a property with a bank for 3 million yuan.
In comparison, textile traders face the greatest financial pressure at the end of the year. On the one hand, the period before the year before is the peak season. At this time, there are many orders, and traders naturally have a lot of funds to advance. Downstream customers often pay according to the contract time, or delay the payment for a while. Generally, it is difficult for large amounts of funds to be returned in time before the year is over. On the other hand, traders do not have decent fixed funds and cannot borrow from banks. At the same time, cooperative processing enterprises also seize the time to collect payment at the end of the year.
Traders have fewer sources of funds at the end of the year, but their expenditures do not decrease, which naturally doubles the pressure. In fact, due to the special circumstances of the epidemic this year, this kind of property mortgage operation has been happening. According to a weaving factory owner, they have 60 looms, 4 million meters of inventory, and all funds are occupied by gray fabrics. For this reason, he sold a house in the middle of the year to revitalize the company.
The credit sales model puts pressure on funds at the end of the year
The credit sales model has always existed in textile production and operation, and this model has both benefits , of course there are shortcomings. The advantage is that the longer accounting period gives downstream companies a certain amount of room for survival, allowing many companies to do more business with limited funds. The disadvantage is that there is a greater risk. The funds cannot be returned for a long time, which puts pressure on the company’s own survival. At the same time, it also has to face the loss of payment caused by the break of the customer’s capital chain.
Most finishing plants and weaving plants on the market sell on credit. However, the general accounting period of weaving enterprises is monthly settlement, which is at best half-year settlement, and the half-year settlement of post-organizing enterprises may be the starting point, and most of them are annual settlement. Due to the large number of finishing plants and types on the market, in order to obtain orders, these companies, on the one hand, sacrifice prices and hope to obtain orders at low prices; on the other hand, they promise longer payment periods to customers.
“We have been processing in a trimming factory, and the accounts have just been reconciled recently. The processing fee in a year is almost more than 200,000, but this The processing fee is only until December, and the processing fee for January will not be settled until next year.” A trader said.
Although traders benefit from credit sales in normal times, at the end of the year they are faced with various processing fee bills that have been backlogged for a year, and the financial pressure is huge when repaying them.
The end of the year is supposed to be the time for harvest, but for most textile workers, it may be a Spring Festival without money. The payment for goods that cannot be returned, as well as the workers’ wages and processing fees that must be paid, make the funds of textile enterprises shrink rapidly at the end of the year. But for ordinary textile companies, as long as they are still doing business, the debts must be paid out. Perhaps having more funds at the end of the year is not a good thing. </p
