4 ms·

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
    - oneTbrain23 3y ago
      It is not good for suppliers to allow no collateral. But they are being forced into. That is what the market has naturally created for supplier. Think about this, a company produce a widget to sell to consumer. Before they can sell, they have to "invest". If the entire world that producer is the one to produce, then consumer can put up the deposit which in this case act a bit like collateral (though more of partial payment). Now, imagine ice cream producer ask you to pay up first, even if you like that brand, you probably will just walk to another seller who offer you the same thing but without the pay first. Now imagine there are many producers but only one of you. Every producers will automatically waive the deposit or collateral to get you to buy from them. This has always been the case in suppliers world. In some instance, supplier able to get collateral but in the form of insurance. That gets very complicated and I feel like it would be harder for you to relate unless you have some finance or business background.
- 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).

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
  - oneTbrain23 3y ago
    It is not good for suppliers to allow no collateral. But they are being forced into. That is what the market has naturally created for supplier. Think about this, a company produce a widget to sell to consumer. Before they can sell, they have to "invest". If the entire world that producer is the one to produce, then consumer can put up the deposit which in this case act a bit like collateral (though more of partial payment). Now, imagine ice cream producer ask you to pay up first, even if you like that brand, you probably will just walk to another seller who offer you the same thing but without the pay first. Now imagine there are many producers but only one of you. Every producers will automatically waive the deposit or collateral to get you to buy from them. This has always been the case in suppliers world. In some instance, supplier able to get collateral but in the form of insurance. That gets very complicated and I feel like it would be harder for you to relate unless you have some finance or business background.
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).