ADM Group, which defines itself as “a global marketing execution partner to the world’s leading brands”, announced the change in a letter believed to have been sent to suppliers in September, but only recently seen in full by Printweek.
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.
“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 stated.
It went on to add that through its growth agenda – both new business and acquisitions – it had integrated into its supply chain some suppliers with legacy payment terms “which do not create the level playing field we want to ensure across our supply chain”.
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.
ADM said that while this would not resolve the working capital imbalance and would still leave ADM “significantly funding the working capital”, the move would mitigate some of the current customer terms extensions requests it was experiencing.
Accordingly, it said that with immediate effect the board guidance, subject to compliance with any applicable laws, was to change minimum supplier payment terms to be 180 days full term, or 120 days SFA.
SFA was undefined in the letter but is thought to refer to a finance or facilities agreement/discount.
As well as the new payment terms, the group said the invoice date was to be recorded as the date of upload/receipt of both the POD and invoice – with no pre-dated invoices accepted; there are no prepayments of deposit payments or cash on delivery; and all payment terms are to be linked to the end of month (EOM) payment run.
ADM added in the letter that it understood the move “will not be warmly welcomed” but said it was not fully passing on the extended terms that its own customers were moving to the group, and that it was keen to maintain its trusted partnerships with suppliers and “remain committed to our future business collaboration”.
Printweek has approached ADM Group but it had not commented at the time of writing.
One print boss who works for a number of print management companies described the situation to Printweek as “preposterous”.
“I would say take your work and give it to someone else, because I'm not interested.”
The boss of a print management company, meanwhile, said he was aghast at the news.
“What planet are ADM on? That’s the worst I’ve come across in 30 years. I don’t care who you are – those terms are outrageous and unworkable.”
Another print boss also commented: “180 days should be illegal. Long payment terms really annoy me, it’s totally unfair.”
The government has claimed that improving the UK’s payment culture could boost the economy by £2.5bn annually.
A statement released by the Department for Business and Trade last month said: “Late payment of invoices and long payment terms are key issues that businesses, especially SMEs, highlight as a barrier to their growth.
“Owners and managers are forced to spend disproportionate time chasing payments; resulting cash flow problems cause even good, viable firms to struggle.”
This summer, ADM Group unveiled a new strategy aimed at driving transformative change within the marketing execution industry, while also revealing its new brand identity to align with its new market positioning.
It made a range of significant investments to bolster its capabilities, including over $10m (£8.14m) to develop its newly branded ‘Hive’ technology suite.
It also recently strengthened its capabilities “across both shopper marketing and digital solutions” with the acquisition of DASS and its proprietary MarTech platform, FLOW.