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>>Tesla is known for having very unhealthy relationships with suppliers That is pretty much all of automotive, Tesla is not an outlier. All of the big manufac

>>Tesla is known for having very unhealthy relationships with suppliers That is pretty much all of automotive, Tesla is not an outlier. All of the big manufacturers know they have their suppliers over a barrel, and they exploit that at all times.

plagiarist 3y ago
I don't know why any supplier ever agreed to net 30 (or more!) without something like the board members' personal finances as guarantees. Companies can just declare bankruptcy, then you're lucky if you're towards the front of the line of creditors.
- davidjytang 3y ago
  Was in a local bid for a tender. Foxconn was demanding net 180 or off the program if supplier can’t stomach it.
- phpisthebest 3y ago
  So you believe every vendor that supplies a screw or push pin to Ford or GM has a personal guarantee from a Ford or GM Board Member? Really?
  - plagiarist 3y ago
    Strawman argument, we aren't talking about single screws. We are talking about lots of tens or hundred of thousands of screws. But, yes, if you want the supplier to loan you money there should be collateral. I don't know why suppliers allowed it to become industry practice.
    - phpisthebest 3y ago
      Because Unsecured debt has been a thing forever, at every level of the economy. I mean a huge part of the population carries around an unsecured line of credit with them every where they go, aka a credit card. I have been in the business for decades, having bought millions of dollars worth of equipment, never once have I had any vendor ask me to get a board members person guarantee to give me a line of credit, nor do I believe have I ever heard of my company asking any of our customers do to anything of the sort. It is very strange that you (and seemingly others given the downvotes) think it is a common practice or should be a common practice.
      - plagiarist 3y ago
        Your credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy. It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners. You can be angry that people think it is weird, but if the best you can come up with is, "I am a big important person and it is industry practice because it is industry practice," you're not going to convince me it is good for the suppliers to have historically allowed this to come about.
        phpisthebest 3y ago
        >>our credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy. These are the same consequences a business face if they do not pay vendors on net 30 terms... >It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners. Having been through personal bankruptcy, its not.. In Chapter 7 Bankruptcy a person can discharge many unsecured debts while keeping their primary home, and most personal possessions, this is a common. There are several ways you can come through Chapter 7 with secured debt being protected / excluded (meaning you still owe) from the bankruptcy and all unsecured debt being discharged. it is common myth that to be "bankrupt" means you have nothing and are homeless, because of this myth people often wait far far far too long to seek legal advice around their rights under the bankruptcy laws and often do something stupid like paying off unsecured debt with secured 2nd mortgages, or HELC making their situations FAR FAR worse >>you're not going to convince me it is good for the suppliers to have historically allowed this to come about. If ti was not good for the suppliers they would not do it To be clear I am not even sure what you are on about, my orginal comment about Automotive Companies being predatory to vendors has NOTHING to do with net 30 terms, or unsecured debt in the form of accounts payable. Hell every supplier I know would be happy with Net 60 terms.. large Auto suppler agreements have all kinds of provisions about quality, On time delivery, and various other performance metrics that the companies can use in very creative ways to claw back money already paid to the vendor, then there are the changes to production forecasting that requires suppliers to spin up or down capacity, staffing ect, only to have it then change soon after. i could go on and on listing abusive practices that have NOTHING AT ALL to do with the very common practice of invoicing customers for goods sold
    - deleted 3y ago
      [deleted]
    - oneTbrain23 3y ago
      Suppliers can't do that or else they lose the contract to supply. You should work in business especially finance side to see no such thing as suppliers' demanded collateral. At best they "bribe" the finance controller/purchasing manager to get a better preferential treatments for them (e.g. clear their invoice faster, or better payment terms from 120 days to 30 days). Collateral may exists if suppliers are limited, e.g. during the chip shortage. Even then, they don't ask for collateral but downpayment deposit or partial payment upfront. It is simply not due to their willingness to turn into industry practice. They are pretty much being pointed a gun to their head to do so. If not, lose the contract and likely business face bankruptcy (akin to death from being shot to the head).
- SkyPuncher 3y ago
  Because another supplier will happily agree to the "riskier" terms. Competition baby.
  - black_puppydog 3y ago
    You mean non-competition on the buyer side. Oligopoly baby!
    - DenisM 3y ago
      A better term in this case is monopsony.
- formerly_proven 3y ago
  Net payment terms really are not part of the problem here.
- hyperbovine 3y ago
  Monopsony. So you make, say, seatbelt buckles? Congratulations there are like basically six companies that buy those in meaningful quantities. The power imbalance is inevitable.
deleted 3y ago
[deleted]
HumblyTossed 3y ago
> That is pretty much all of automotive, Tesla is not an outlier. All of the big manufacturers know they have their suppliers over a barrel, and they exploit that at all times. So? Is it okay then? It's only common because of this type of acceptance.

plagiarist 3y ago

I don't know why any supplier ever agreed to net 30 (or more!) without something like the board members' personal finances as guarantees. Companies can just declare bankruptcy, then you're lucky if you're towards the front of the line of creditors.

davidjytang 3y ago
Was in a local bid for a tender. Foxconn was demanding net 180 or off the program if supplier can’t stomach it.
phpisthebest 3y ago
So you believe every vendor that supplies a screw or push pin to Ford or GM has a personal guarantee from a Ford or GM Board Member? Really?
- plagiarist 3y ago
  Strawman argument, we aren't talking about single screws. We are talking about lots of tens or hundred of thousands of screws. But, yes, if you want the supplier to loan you money there should be collateral. I don't know why suppliers allowed it to become industry practice.
  - phpisthebest 3y ago
    Because Unsecured debt has been a thing forever, at every level of the economy. I mean a huge part of the population carries around an unsecured line of credit with them every where they go, aka a credit card. I have been in the business for decades, having bought millions of dollars worth of equipment, never once have I had any vendor ask me to get a board members person guarantee to give me a line of credit, nor do I believe have I ever heard of my company asking any of our customers do to anything of the sort. It is very strange that you (and seemingly others given the downvotes) think it is a common practice or should be a common practice.
    - plagiarist 3y ago
      Your credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy. It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners. You can be angry that people think it is weird, but if the best you can come up with is, "I am a big important person and it is industry practice because it is industry practice," you're not going to convince me it is good for the suppliers to have historically allowed this to come about.
      - phpisthebest 3y ago
        >>our credit card is guaranteed by your personal finances and there are actual consequences for you if you default or declare bankruptcy. These are the same consequences a business face if they do not pay vendors on net 30 terms... >It is weird to have a completely unsecured loan that is dischargeable by bankruptcy that won't cause personal loss for the owners. Having been through personal bankruptcy, its not.. In Chapter 7 Bankruptcy a person can discharge many unsecured debts while keeping their primary home, and most personal possessions, this is a common. There are several ways you can come through Chapter 7 with secured debt being protected / excluded (meaning you still owe) from the bankruptcy and all unsecured debt being discharged. it is common myth that to be "bankrupt" means you have nothing and are homeless, because of this myth people often wait far far far too long to seek legal advice around their rights under the bankruptcy laws and often do something stupid like paying off unsecured debt with secured 2nd mortgages, or HELC making their situations FAR FAR worse >>you're not going to convince me it is good for the suppliers to have historically allowed this to come about. If ti was not good for the suppliers they would not do it To be clear I am not even sure what you are on about, my orginal comment about Automotive Companies being predatory to vendors has NOTHING to do with net 30 terms, or unsecured debt in the form of accounts payable. Hell every supplier I know would be happy with Net 60 terms.. large Auto suppler agreements have all kinds of provisions about quality, On time delivery, and various other performance metrics that the companies can use in very creative ways to claw back money already paid to the vendor, then there are the changes to production forecasting that requires suppliers to spin up or down capacity, staffing ect, only to have it then change soon after. i could go on and on listing abusive practices that have NOTHING AT ALL to do with the very common practice of invoicing customers for goods sold
  - deleted 3y ago
    [deleted]
  - oneTbrain23 3y ago
    Suppliers can't do that or else they lose the contract to supply. You should work in business especially finance side to see no such thing as suppliers' demanded collateral. At best they "bribe" the finance controller/purchasing manager to get a better preferential treatments for them (e.g. clear their invoice faster, or better payment terms from 120 days to 30 days). Collateral may exists if suppliers are limited, e.g. during the chip shortage. Even then, they don't ask for collateral but downpayment deposit or partial payment upfront. It is simply not due to their willingness to turn into industry practice. They are pretty much being pointed a gun to their head to do so. If not, lose the contract and likely business face bankruptcy (akin to death from being shot to the head).
SkyPuncher 3y ago
Because another supplier will happily agree to the "riskier" terms. Competition baby.
- black_puppydog 3y ago
  You mean non-competition on the buyer side. Oligopoly baby!
  - DenisM 3y ago
    A better term in this case is monopsony.
formerly_proven 3y ago
Net payment terms really are not part of the problem here.
hyperbovine 3y ago
Monopsony. So you make, say, seatbelt buckles? Congratulations there are like basically six companies that buy those in meaningful quantities. The power imbalance is inevitable.

deleted 3y ago

[deleted]

HumblyTossed 3y ago

> That is pretty much all of automotive, Tesla is not an outlier. All of the big manufacturers know they have their suppliers over a barrel, and they exploit that at all times. So? Is it okay then? It's only common because of this type of acceptance.