Dr. Pepper is asking for 360 day payment terms in RFP with ad agencies.

Yeah, the soda company that also makes those 1 cup coffee machines want a 1 YEAR payment term....

1, a scam to get someone to buy in.

2, a scam to get leverage on current contractors.

3, they are in deep Doo-Doo.











4, pay dependent on results?


Anyone trying this should know it is ultimately going to increase costs.
No way someone Is going to carry them for a year without a fee tucked into the contract. Unless, some poor small outfit bets big on landing a prestigious client, then that fact landing better paying ones.

It's all a Ponzi scheme....

When 08 hit many saw national brands go to 60 then 90 day terms in industries with 30 day standards. This forced those lower on value chain to extend 120 days. Even if they didn’t many got paid at the 90-120 day mark anyway. Guessing they have liquidity issues or project them and marketing is up near the top of priorities for many. Not a good sign or precedent frankly.

I’d be happy to give Dr Pepper their 360 day terms, but they would not care for the prices they’d end up paying……

They are financially strapped obviously. I wouldn't walk but run away from any company that needs a year to pay.

the entire economy is hanging on by it's fingernails. When it goes, and it will, the collapse will be staggering.

This ^^^^^^ ... I worked for a large manufacturer who had "Net Prox 25" payment terms for ALL of their suppliers. Basically, any invoices received in the current month were paid on the 25th of the following month. Take it or leave it. They were big enough that if you wanted to do business, you took it. OTOH, suppliers always factored the float in their prices. Games that accountants play...

Mebbe if a 20oz soda pop wasn’t $2.29 + tax they would make money….

Ps…

The Zero sugar Dr. P sucks….

Over 30 days interest is tacked on. Sitting on my money any longer is like giving them a interest free loan.

Not all companies that hold back are in trouble. I did contract mechanic work for Henckels McCoy, I think they are one of the largest underground contractors, and it was SOP, 90 days before you get paid. Very painful for a one pony mechanic to carry thousands on a parts and welding supply account. 360 days though, now that sounds like trouble.

90 days is very tough for a one man show. Hard to generate alternative sources of cash flow when you are a one man band also.

The idiot that owns our company has us factoring 100% of our bills.

What does that mean?


Been doing it for over 15 years, I'd love to have the money he has wasted to
Get his money NOW.


Sad thing is, once you get your last outstanding bill, it is expense for nothing. If we had never started, we would be getting paid for past work
Every week or month. Now, we get this weeks money. Minus 10-20%.

It has become a trap. Stop factoring, no money for 30, 60, 90 days.

this ^^^

kwg

I'm probably going to go up the home equity loan to the max value I can get with the idea that if there is a crash coming soon, loans may be hard to get and I may stumble upon a once in a lifetime opportunity in a home or land.

In 2008 I saw a chance to get an incredible home for a fraction of what I though it was worth, but even with great credit, you couldn't get a bank to give you a loan. That home is easily 3X the asking price now.

If nothing comes up, well - no additional cost to me for doing it.

Welcome to the oil patch.

There is a 100% chance the fed keeps raising rates until something breaks, which won't be much longer IMO. The sweet part is the EU is right on track with us, and China is isn't far behind. So cripple 70% of the worlds GDP at the same time will be interesting. At 130% debt to GDP in the US and the EU hanging in ~100%, there just isn't room for any stimulus this time except maybe China.

Senior coffee @ Hardee's increased from .75 to $1.29 ! FJB !

Once one is established and running right, it's no big deal.
And the oil patch isn't unique, it's common everywhere.

While you wait for 90 days to come due, pay comes from the jobs 3 months ago.

The issue with stopping factoring is you got paid 80% of what jobs you did
30-90 days ago.

So now, there is nothing, (not a single dime) coming in for 1-3 months.
To a factory.

The owner is a shady corporate raider type.
Buys well capitalized small factories, at good prices. (Simple, smart)
Maneuver the real estate into one of his shells, and leverage the business to the max.

If the business starts paying the debt down, he borrows more.
If it fails. GREAT! He bankrupts the business, let's the lenders clean the
equipment out of HIS building, and rents the space. While walking away
With the borrowed money in his pockets.

He got into this factoring deal when too many things went bad at once,
now he is stuck. Not an office guy, but my mental calculations based off occasional monthly sale numbers and knowledge of factoring puts us at
$3-5million annually lost to "interest".
Not a big outfit, that's quite a bit every year. For something that only payed off for a few months, years ago.

If lumber prices mean anything...framing lbr down 9 bucks this week again, OSB down 10% too. I get lbr quotes on 'random lengths .com'. Which quotes on the shipping dock at the mill. Don't know what prices are at retail level. Overall for the year some are quoting all categories down 60%.

I wish my BMW mini looked like that.
My cream colored 2004 S model has the ratty look.

Top speed 134 mph.
I have had it up to 70.

What do you think Teal?


We had already gone over the cliff by your estimation a few months ago.....where are we now?

I don't know - were it not for bars/restaurants - today's jobs numbers would have been murder.

I wish I did know. I just know what I'm seeing in transportation and we tend to see recession and recovery before the greater populace feels it.

Rates are down, carriers closing shop and those that are open, are literally begging me for work in some of their emails. It's not good. Retail transportation usually sees a bump for holiday. In the old days, large carriers like SNI would lose money in the first 8 months of the year and make enough in the last 4 to be profitable overall for the year. Last 4 months of this year - ain't happening like that, volume wise.

2 separate and large LTL companies looking to furlough drivers over holidays. That's rare and LTL is usually very exposed to mfg and holiday freight this time of year.

Everyone saw what was going on in Covid years and assumed that would continue forever. Dumb/stupid. It stopping combined with Dem leadership means beans and bread only for the next 18-24 months.

My business fell off a cliff after the 2nd week of October.
We are averaging less than half of what we were doing the first nine months of the year
It has not rebounded any whatsoever since.

You can only live on borrowed money so long. There's only one way outta this and it's down...........pains coming...........

I've been seriously hoping for a downfall for over a year.
With inflation and everything else, it is inevitable.

Chicken/egg, high fuel prices and a bad economy are like peas and carrots.

Americana are status hungry and use possessions to show their borrowing
power. Solvency isn't judged. Ownership either.
What they drive, where we live, our vacations(hunts?) are.

We are coming out a of a time of crazy home and car prices. The 2 biggest
reasons for large debt. Couple it with inflation, especially fuel and food.
And just like 2007, Americans are overleveraged at a really bad time.

Been hoping for a fall because I fear the only thing holding the cards up
is increasing high percentage debt.

The longer we prolong the reckoning, the worse it will be.



My employment is a great countra-indicator.
We run off cycle traditionally, our five year outlook is currently better than
any time in this century. And it keeps getting better. It has never mirrored the general economy except in the early 80s.


Just a factory worker/piss poor philosopher,
probably not worth the time taken to (poorly) compose it.

that's what I've been fearing, but so far, we're not seeing much change. The consumer seems to keep wanting to eat, so we keep sending the truck out. Covidiocy took out a couple of our competing farms, and that's helped a bunch, for sure.

Still can't help expecting for the hammer to drop, anytime now, but the economic numbers don't show it. 2.7% GDP growth in the third quarter. No s#it?

FedEx Freight - largest LTL provider starts furloughs this weekend. When they're normally looking for a pile of seasonal help to come aboard, they're letting guys take time off. And they're doing it without disposition of the rail situation where a strike would push truck rates to the moon.

Law enforcement calls that a "clue".

Furloughs

We only use LTL[less than?] for furniture shipments.
Spring, summer and early fall we were receiving 1 or 2 shipments weekly.
Currently it's 1 every 2-3 weeks.

You have to remember that this is an inventory recession. Everyone, and I mean EVERYONE, over-bought on anything they could get their grubby hands on, just to make sure they had it on hand. Warehouses were all filled to the rafters, and mobile warehousing booming literally anywhere trailers and containers could be parked and stacked. People paid historically high prices for trucks to bring that stuff so they would be sure to have it..... all six to nine months earlier than in previous years.

It's not that shipping is slow, it's just that shipping moved up six months on the calendar. We're in the post-holiday shipping doldrums already.

My customers are not in that boat. Other customers aren't in that boat. They don't have inventory and aren't ordering because others aren't ordering. Understand, siloed and different from area to area.

Lumber futures are $430, it was $1500 last year, very close to pre-rona numbers now. Romex 12/3 is $1 a foot, it was $1.50 earlier this year, and .60 a foot pre rona. I would expect we will be pre-rona prices by summer on most building supplies as the economy struggles. It takes a bit for wallstreet to catch up with main street, and I think main street is starting to struggle as it sobers up from all the free .gov money and 0% interest rates.

Housing and durable goods are the first victims of higher interest rates, I would expect things like auto's, appliances, and housing to fall quickly and have an affect on the broader economy mid 23. The way to fix inflation is recession, and we are heading for some pain.

We[I] have been reducing inventory all year, our primary supplier is way over stocked as per above.

It really didn't require genius level abilities to see what was on the horizon IMHO

CBO’s 2023 posted outlook:

Higher inflation, slower growth and larger budget deficits.