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OK...I cheer to so many things Apple does regarding operations. But when I read Apple [..] sometimes doesn't pay until as long as 90 days after it uses a part
by binarray2000 15y ago
OK...I cheer to so many things Apple does regarding operations. But when I read
Apple [..] sometimes doesn't pay until as long as 90 days after it uses a part [...]
I think only "lame". With $80B and 40% margin, company with that reputation...
Manufacturing is hard. And very expensive. Organize processes, buy machines and raw materials, pay the labor. And then comes Apple and gives itself a loan (basically, it's a loan) from a manufacturer.
No, sorry. It's lame.
PS - Just as a perspective: I help part time in a company my father and brother own (retail and manufacturing company). Even thou other businesses in the industry and the country do the same thing as Apple, they don't. I'm disgusted by that practice here...so, why not be disgusted by it when Apple does it?
- MichaelApproved 15y agoWeigh that with times that they pay in advance. It's a case by case bases and I'm sure they're not late with payments. If they wait as long as 90 days, I bet it's because that was part of the business agreement they made with the manufacturer.
- tripzilch 15y agoUm, no that's not how it goes. Paying late in manufacturing is all over the place, 30 days is considered acceptable, 60 the absolute limit, but paying 90 days late is just something Apple can get away with because of it's size and "occasional ruthlessness".
- screwt 15y agoIt's not paying 90 days 'late'. It's completely standard in manufacturing for payments to be agreed as due 30, 60 or 90 days after delivery. 90 days fairly long, but not particularly unusual. It's also not unusual for companies to pay later than the agreed dates, but no-one has said Apple's doing that.
- asmithmd1 15y agoI would bet that 90 day payment was a one off. You notice NO ONE quoted in the article was willing to have their name used so it might have been a friend of a friend story. The suppliers who talked gave details about turning down a $1 Billion pre-payment!
- Tangurena 15y agoI disagree for 2 reasons. First, Apple is notorious with NDAs. Second, many large retailers are quite willing to cancel contracts with any supplier that gets uppity enough to complain in public. Walmart is so notorious for cancelling suppliers that most Walmart suppliers will refuse to allow any company representative speak on the record.
- deleted 15y ago[deleted]
- viscanti 15y ago90 days is pretty standard. Some companies offer a discount if accounts are paid early. There's no indication that's the case here, so Apple is likely paying when they're supposed to.
- lemma 15y agoWithout knowing anything else, 90 days sounds like the amount of time sellers extend credit to Apple (30 and 60 days are also common). Usually such terms come with slight discount for early payment. Good cash management practice requires that they pay on the last day they get a discount or wait until the last day to pay.
- tptacek 15y agoWelcome to business in the real world. Try consulting for any Fortune 500 company sometime, and see how long they take to pay you after you invoice them. If 90+ days is the norm for paying small consultancies, it's hard for me to feel too sorry for multi-billion-dollar electronics suppliers.
- binarray2000 15y agoWell, I AM talking about the real world (note my post scriptum). Also, when you talk about small consultancies and Fortune 500 companies: I have worked for a small consultancy and, later, as a freelancer for German top companies (Deutsche Telekom, Deutsche Post, Munich Re - to name a few) and they all have paid, both that consultancy and me, within a month of which the consultancy/I have sent the invoice. USA is, judging from your comment, different... I see that now. Aside from being (in my opinion) a bad business practice, it's also lying to the shareholders. You see, that $80 Billion figure would be smaller if they'd pay the manufacturers in a reasonable timeframe.
- tptacek 15y agoAll I can tell you is that in the US, very long delays before invoices are paid out are absolutely the norm. I didn't jump in because I particularly care how Apple pays vendors, but because many people on HN are considering freelancing and bootstrapping, and they should know: big companies are never going to pay them on time. Keep cash in the bank. Your comment about Apple's balance sheet is pretty silly.
- binarray2000 15y agoWhy it's silly? Apple has 90 days of non paid supplies on the books (and $80 billion in the bank - "cash and investments" as stated in the article). If they'd (OK... IDEALLY) pay all of them at once and continue paying supplies as they get delivered, only then would their balance sheet look realistic. Or, am I missing something?
- 15y ago
- AlexMuir 15y agoAt this size, I don't really feel like it's an issue. Manufacturers for Apple will all employ financial analysts whose job is to price the 90-day payment terms into their prices. If you're going to pay me tomorrow, I'll quote you $1 a widget. If you're paying in 90-days it's $1.04 a widget. Incidentally, I know a wholesaler [1] in London which sells at almost cost price. It makes most of its profits from sitting on the cash it takes for 60 days, before paying it to suppliers. [1] http://www.dhamecha.com/ http://www.dhamecha.com/
- jmelloy 15y agoThis is also one of the tricks Amazon uses to keep pricing low.
- barredo 15y agoBig German retailer mediamarkt/Saturn does this. So does French Carrefour. 90/120 days I think
- cbsmith 15y agoMy understanding is that this is most of Costco's profit model too: they take merchandise on consignment for say 60 days, sell it all at cost within a week, and then invest the float.
- Tloewald 15y agoIt's priced into everyone's models. I worked in the ad industry fo a while where our clients (ad agencies) paid 50% up front and then the rest up to six months later. Meanwhile the artists lived hand to mouth and waned to be paid weekly in checks made out to cash. Meanwhile our hardware was all leased on multi- year terms despite becoming obsolete within 18 months.
- herdrick 15y agoI read in the 90s that Microsoft's suppliers appreciated that MS never went the 'net 30' or 'net 90' route like other Fortune 500 corps and just paid as soon as they got the bill.
- adamtmca 15y agoI never understand why people try to pass judgment on a transaction like this. Their suppliers are real businesses who are capable of modelling their cash flows and deciding whether or not this is profitable. No one ever stops and says, "wait.. it makes business sense to sell to Apple, but this is lame so let's not do it".
- dlss 15y agoI think "no one" is a bit strong there. The article cites one company who walked away from a profitable $1B deal for a dressed up version of "but this is lame"
- deleted 15y ago[deleted]
- xenophanes 15y agoNo, they said something a bit like that in their PR. They walked away because of cold hard decision making, economic forecasts, risk assessment, Apple demanding too high a price for iPhones, etc, nothing fluffy.
- philwelch 15y agoApple's bought parts on short term credit since it was Jobs and Wozniak in the garage. Though back then, it was because they were broke until they sold the Apple I's, and now it's because they're flush enough with cash that the time value of money favors the delay.
- nikcub 15y agoIf the manufacturers need the money they can sell the Apple debt for a few bp since the company is AAA rated