SIA Gauges Impact of Credit Issues

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• February 06 2009
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Many conversations at SIA 2009 last week were focused around securing or maintaining credit lines, according to a recent report published on SIA’s official Web site.

“Although overall dollar and unit sales were kept afloat in the early season by strong carryover sales, the discounts that brought shoppers into snow sports stores have left retailers with less working capital.  Some retailers indicated that they might have difficulty paying for product already sold this year and that which still remains in their inventory.

Many suppliers in the snow sports industry provide retailers with working capital through payment terms that effectively result in the suppliers providing ‘lines of credit’ to retailers.  Payment terms of 30 days are standard in most other industries but snow sports vendors often offer retailers credit of 120 days or more. Due to these longer than normal payment terms, vendors in the snow sports industry save buyers over $30 million each season in interest charges that would be paid to financing institutions were the retailers utilizing typical bank financing.

Additionally, most suppliers accounts receivable are unsecured. This means buyers are not required to provide collateral to secure them which can result in write-offs if and when those retailers fail to survive.”

Read the entire article HERE.