ICSM Business News: print industry astonishment at ADM as the multi-national marketing firm demands 180s days of credit from suppliers

By Harry Mottram: Design, marketing and printing firm ADM Group was founded in 1992 and now has 46 offices in 33 countries more than 700 staff and works for over 800 brands worldwide. And yet despite its obvious wealth and success is demanding suppliers to grant them 180 days of credit.

The news as reported in the trade publication Print Week has caused a mixture of astonishment and anger within the industry when 30 days from date of invoice is considered the norm. ICSM’s Ian Carrotte said it was incredible that a major firm would expect its suppliers to effectively give it free loans for several weeks. He said: “ICSM has campaigned and promoted the business ethic that clients pay their bills on time – usually 30 days but it can be shorter - as it frees up cash flow for small businesses who have already had to pay up front for materials and overheads. Many will recall Carillion who insisted on 120 days of credit citing financial reasons – and we know what happened to them. Our advice is not to trade with firms that make unreasonable credit terms as it can put an impossible strain on cash flow.”

Readers of Print Week have shown their distain for the ASM’s payment terms. One commentator noted: “It appears they are relying on their suppliers to effectively bankroll the business. The bank obviously won't so the writing is printed loud and clear on the wall.” While another said: “ W Hotels, Wyndham Group, Budweiser , L'Oreal and more brands, none of whom would accept payment 180 days after their service if you stay in their room or drink their beer, many will have fair payment terms in their tender and RFQ process.”

Print Week reported the reasons given by ADM for announcing their payment terms. They said in their story: “The changes were due to be effective for all POs issued to suppliers from 1 October 2023 onwards. In the letter, ADM said that over the past several years, it had seen a clear trend of its customers requiring the group to extend its payment term.”

They quoted the letter: “To date we have tried to absorb these increases into our own working capital however the current balance we have between supplier and customer payment terms had reached a level where ADM is bearing too much of the funding burden.” It effectively implies they are doing their suppliers a favour in making them wait longer for payment – something many of the online comments find incredible. Another commentator said: “Isn't this just prolonging the inevitable that they will just run out of cash further down the line owing their suppliers even more?”

ADM mentioned a strain on its working capital which suggests they may have a problem in being paid on time by their clients and so are simply passing on the problem to their suppliers. The board of directors said it had therefore agreed that in order to rebalance the working capital profile and ensure a level playing field, it needed to increase and standardise supplier payment terms.

Ian Carrotte said this didn’t sound right as eventually the problem will arise again as the extended payment terms fail to help their short term cashflow problems. He said: “Where does it end? 320 days or even longer? It is not the way business works.”

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ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com