There seems to be a lot of discontent with the 90 day finance terms . Interest free periods are an integral part of our society and many companies offer these terms despite them being in a competitive environment. We all take advantage of 55 day interest free credit cards, Harvey Norman repeatedly offers 4 years interest free etc.
Now the "cost" to us for offering these terms is minimal - however the benefit to companies like Tempura is massive. For Tempura to have all their suppliers grant them 90 day terms means they have a real opportunity to sell their product prior to or at about the same time their invoices are due. This reduces the "float " required to enable them to operate on a day to day basis.
Now I am certain our directors are fully aware of how much this means to them and will have easily "factored " this into the negotiating price. Its not to hard to change the markup margin from lets say 30% to 35% when no one else has a comparable product.
So sure we might see the amazing results 3 months later than we perhaps might like ideally but heck I am more than happy to accept that situation if it keeps our potentially huge customers happy.
AJX Price at posting:
82.5¢ Sentiment: Buy Disclosure: Held
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