Harvey Norman is pressuring vendors to change their trading terms to 45 days. In the past they have operated on 30 or under terms depending on their relationship, discounts and rebate volumes insiders have told SmartHouse.

This week the Company combined the buying offices of Harvey Norman, Domayne and Joyce Mayne with several buying staff being retrenched.

Under pressure from the new 45 terms is Australia’s largest distributor Ingram Micro who has recently announced that they have cut 16 back of house credit management staff.

Ingram Micro Australia who operates on wafer thin margins some as low as 2% are now being forced say management to accept 45 days instead of 30 in a move that one insider told ChannelNews was having a big impact on cashflow.

A major vendor who has a multimillion dollar exposure to Harvey Norman said ” the bottom line is that when a partner like Harvey Norman want extended terms we have to borrow more money if we decide to extend their credit terms. Several retailers are under pressure and one way that they are preserving cashflow is by negotiating new credit terms. Others are cutting back on stock levels however this has hurt some retailers. For example in December and January we saw demand for flat panel TV’s rise however some retailers suffered because they did not have stock or extended credit terms”.

One retailer who has admitted that a lack of stock hurt their operations was Clive Peeters they have also said that in recent months that they have cut back on stock levels in an effort to preserve cash flow.

One major consumer electronics retailer said the issue for Harvey Norman is not consumer electronics but everything else. “They have a lot of stock in their warehouses from furniture and bedding to soft furnishing and because this merchandise is not selling they have a potential cash flow issue.”.

“In reality they will be pushing their terms out to 60 days. With many retailers who are not publically listed the insurance Companies who are providing credit cover for vendors are going to be reluctant in this environment to support extended credit terms” they said.

A look at JB Hi Fi credit terms shows that currently they are trading on a 56 day cycle from the placing of an order to the payment for the product.

David Ackery General Manager of Electrical at harvey Norman said that he was unable to comment on the issue of credit terms.