It’s Time to Talk About Fashion’s Poor Payors

A number of prestigious retailers have been squeezing young London designers on payment terms and, in some cases, failing to pay on time, which can be debilitating for emerging fashion businesses. These practices must be stopped.

Source: Shutterstock

LONDON, United Kingdom — One of the first lessons I teach my students at Central Saint Martins is that fashion is a cash flow intensive business. Even when a fashion start-up is humming along nicely, there are still very long periods, during each season, when no money is flowing into the business, but many costs are being incurred. Even in the best case scenario, it can be up to six months after first incurring the costs of producing samples, putting on a show, ordering fabrics and manufacturing a collection before these young labels are actually paid the money that is owed to them by stores that have placed orders.

Combine long payment cycles with rapid growth — especially in the early years, fashion businesses tend to grow very quickly, sometimes doubling revenues each season — and it becomes a very delicate situation to balance indeed. If these cash inflows and cash outflows are not managed extremely carefully, even very talented designers, with high-potential businesses, can go bankrupt, because they simply can’t pay their bills or their staff.

So, it can be debilitating for young designers when retailers don’t pay on time. But according to several conversations I have had, some stores are taking an unacceptably long time to pay their bills. Even some of the industry’s most prestigious retailers — including celebrated London concept store LN-CC and Corso Como, the renowned fashion boutique in Milan — were named by multiple sources as being very slow payors. Other retailers, especially those from international markets including Italy, Russia and Greece, were identified as being amongst the most problematic, requiring extra care and caution.

Corso Como Milan did not respond to an email requesting comment, but to their credit, LN-CC was very open to having a dialogue on these reports of slow payment. Fraser Harper, the company’s chief executive, said: “I think there is a misconception that we are this great huge juggernaut. We are not. We aren’t even two and half years old yet, and the speed of change in the organisation is fast. We want to obviously engage with everybody’s staff, suppliers, customers, in a really, really positive way, and that’s part of our culture.”

“There have, on occasion, been some cash squeezes and these have happened more than once,” he acknowledged, while adding “we want to be responsible purchasers and we want to be a responsible retailer, and we have a track record of exactly that.”

But slow payments are not the only issue facing young designers. According to several sources who spoke to BoF, a slew of big-name department stores, concept stores and online retailers have reportedly been squeezing designers on payment terms. One internationally known London-based concept store has reportedly been asking designers to pay on “net 60 days” terms (and then stretching this out to 75 days), while others have been asking young designers to sell to them on consignment. Consignment means that designers get paid nothing up front and only receive payment after the clothes have sold, forcing young start-ups to bear 100 percent of the risk of items remaining unsold at the end of the season. This practice also creates a severe administrative burden for these young businesses, forcing them to constantly track sales and chase accounts for payment once garments have been sold from the shop floor.

To dig deeper into the issue, BoF contacted several major retailers around the world to learn about how they work with young designers. When asked for details on their payment terms, a spokesperson for Colette in Paris said “we work with young designers, but not on consignment and we pay net 30,” while Joyce in Hong Kong said they occasionally work on consignment, but usually pay 30 percent deposits on “net 30 days” terms. But most other major retailers declined to comment or did not provide clear or timely responses to our questions.

So how do young designers find themselves in this troubling position in the first place?

These issues are so sensitive and young designers are so concerned about the ramifications of speaking out against powerful retailers that most declined to speak about the issue on the record.

“These stores have these big reputations and [as a] small designer, you feel super honoured because they are coming to you. They are going to make a nice order. When you request your deposit and you don’t get it, you email and you email but they don’t respond because they don’t want to pay that deposit,” explained Valery Demure who works with many top jewelry and accessories brands, describing how it feels to be a sought-after young designer. “So basically, you produce the order anyway because you really want it in [those stores]. You contact them, and they ignore you. What do you do?”

Recounting one such experience with a very slow payor, a rising London-based designer, who asked not to be named, said: “It had a huge effect on me last season. I was very clever about the way I strategised the cash flow, but everything was timed so closely that when a mill had a three week delay on a fabric and I wasn’t getting paid, I was quickly able to do the math [and realise] that if something doesn’t change, in three to four weeks time, I’ll be gone.”

“At the beginning, you are in an awkward position,” recalled Peter Pilotto, one half of the eponymous London-based brand that has quickly built a business of substantial scale. Still, Mr Pilotto remembers these kinds of problems from the early days of his business all too well, saying he has been forced to stop working with several “prestigious accounts” due to very slow payments. He declined to name the offending stores on the record.

“On the one hand, you are so happy that they have placed an order, but then they don’t pay you, which creates a chain reaction because you have promised your manufacturers that you will pay them when the stores have paid,” he said. “It’s a terrible situation.”

Indeed, designers can remain in a state of constant cash flow crunch for years and years, until they are able to secure lines of credit from their banks, or external investment, to provide financial cushioning from the dramatic ups and downs that are symptomatic of the fashion cycle. In the mean time, smart designers must insist on clear payment terms and up-front deposits to ensure that they have enough capital to pay their manufacturers and their staff.

“We’re very careful with the payment terms we secure, particularly on very young designers. Deposits are often necessary in order to fund production,” said Maria Lemos, founder of RainbowWave, a highly-regarded showroom in London that works with some of the capital’s top emerging fashion brands, including Peter Pilotto, Ostwald Helgason, Marios Schwab and JW Anderson.

“The problem is that young designers are often required to sell their own collections and because of their lack of experience they accept terms that are risky for their businesses. I think what they need to know is that it’s better not to take an order, than to take a risky order. That’s my advice,” Lemos added.

Ms Demure agreed, advising: “If you’re confident with your product; if you know your product is good and you have respect for it, and respect for your business, then don’t let it go too easy with stores. If I am going to do orders [on] consignment, I need to find stores that will give me the visibility, who are going to present my product properly, who are going to be behind it. You need to [have] conditions. It’s really a negotiation. Don’t be too kind. Be very business-like and professional.”

This firm, take-it-or-leave-it approach seems to work. Mary Katrantzou, who said she has not faced too many payment issues, told me that in the first few seasons she insisted on 100 percent payment in advance, before shipping orders. “We were very rigid,” she said. “There was no other way we could make it work from a cash flow perspective.”

But even reasonable payment terms that are agreed up front, can slip after a few seasons. “Whatever payment terms you negotiate from day one, you’ll never get a better deal that that,” observed Matthew Harding of Palmer Harding, a London-based label founded just a few years ago. “They’re always trying to push for more lenient terms,” making it harder and harder to manage cash flow as the business grows.

But there are always two sides to a story.

“Designers also need to understand and respect the contractual agreement of sales. They need to respect delivery dates and ensure quality and fit of product,” said Ms Lemos. “The problem the retailers face is that when they deal with young designers they are taking a risk: they are never sure that deliveries will be timely or that production will be up to standard.” Late deliveries can be very damaging to sell-through rates, a key performance metric for fashion retailers.

Five years ago, buyers used to tell me they were hesitant to pay deposits to London designers, who had a widespread reputation for delivering orders very late and often at quality levels that did not match the samples. In some cases, they received orders that reeked of smoke or were covered in dust and filth and were in an unsalable condition.

Though this seems to be happening less frequently now, it remains a problem. Mr Harper of LN-CC explained that they have received and accepted deliveries as late as two weeks before the start of the sale period from certain designers who couldn’t sort out their production on time. “Where other retailers would have cut it and cancelled, as far as I’m aware, we’ve never cancelled an order and we’ve always honoured the payment,” he added.

One thing everyone seems to agree on is that defining and adhering to very clear payment terms, with some portion of the payment before delivery, as well as ensuring clear communication on both sides of the table, is crucial for building productive commercial relationships. The problem is that no clear standards exist and even when clear terms are in place, they are sometimes flouted.

“On several occasions I have seen designers’ cash-flow compromised because of retailers total disrespect of payment terms. This is unacceptable and can put a designer out of business,” said Ms. Lemos. “A big brand like Prada can take late payments; a young designer cannot.”

“I think the worst thing for young designers is the stores’ lack of communication with regards to payments,” she continued. Emails are unanswered, and phone calls go unreturned, leaving designers completely in the dark about when they might receive payments, which can often lead to stress, if not panic, about keeping the business afloat.

“Write an email, pick up the phone, speak to the person, and say ‘Listen, I’m really tight this month, I’m going to do everything I can to get it over to you.’ At least that keeps the ball rolling and keeps the dialogue going,” said another London designer who asked not to be named, but said he had to literally walk into one stockist himself and ask the sales staff for a status update on his payments, after discovering that most of his garments had sold out.

Mr Harper of LN-CC also believes that having good communication and a clear payment plan can help to avoid such problems. “[Sometimes] we have a 20-week payment plan and we will often start that long before delivery, so [designers] are accumulating a bit of a deposit beforehand,” he said. “It’s completely trustworthy and we have a great relationship and they are the [labels where] the orders really grow much more significantly and we do try and work in a much more creative way with them. Those [that] operate in more of a partnership fashion, obviously, will get priority in times of a squeeze.”

Ms Lemos said London designers could take a page from their American peers, who often work with invoice factoring companies to vet and underwrite their invoices. “What I see in their approach is that anyone who doesn’t pay the deposit from confirmation is cancelled and we are talking some seriously good stores,” she said. “And while it could be that you can lose a few stores in season number one, by season number two [if] the stores still want the brand they will pay promptly. It makes people behave.”

But perhaps we need to go even further than this. It seems to me, based on more than a dozen conversations I have had about this issue with people on both sides of the debate, that many stores are indeed leveraging their power to negotiate terms which are extremely challenging (or unfeasible) for young designers and, ultimately, detrimental to their businesses.

BoF obtained access to a set of strongly-worded email exchanges between one London store and a young designer, where the buyer threatened to drop the collection entirely unless the designer continued to work with the store exclusively, despite the fact that the designer had already done so for six seasons.

These kinds of bullying tactics, along with chronic late payments, are a scourge on the fashion industry and must be stopped.

While the responsibility for negotiating acceptable terms lies squarely with the designers and their agents (this is part of running a business after all) there should also be clear guidelines in place, so retailers can’t arbitrarily throw their weight around, leading designers to suffer terms that most reasonable businesses would find unacceptable. It is simply not ethical to build a business this way, especially when young designers are at such an early stage of their development.

The British Fashion Council (BFC) has already negotiated a cascading scale of standard rates for models walking in London Fashion Week shows, based on a fashion brand’s annual revenues. Perhaps it’s time for the BFC to establish a similar set of standards, both for payment terms and delivery schedules, that will help to ensure that designers and retailers alike uphold their end of the bargain and everyone is treated fairly.

If retailers, both in London and around the world, would like to continue to trade on the cool factor of this city’s immensely talented young designers, then they should also be willing to play by a fair set of rules that ensures that these businesses can survive, and thrive, over the long-term.

Updated by The Business of Fashion: In response to a request for comment, on 5 April 2013, Caroline Rush, chief executive of the British Fashion Council, told BoF: “New talent generates media and consumer excitement for retailers and that relationship must be mutually beneficial. The BFC aims to develop guidelines over the coming months, through consultation with retailers and designers, to create a framework for payment terms that ensure wholesale orders make, not break small businesses.”

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26 comments

  1. Deposits? The risks are enormous for a retailer beginning with a young house. Catastrophic … the issue of delivery dates being respected, actually being able to produce the majority of an order so that a shop can show their customers what the collection is about and how it works with other designers.

    It’s a very hard business with years of loyalty being tossed out as designers take the opportunities to work with flash and/or discount sites and develop their own shops and websites while plying certain stylists and/or “celebrities” with free clothes and sometimes money. In some ways, it’s incredibly adversarial with some designers becoming downright duplicitous.

    Stores love to pay their bills on time: that’s the backbone of sauntering into a showroom and negotiating for some level of exclusivity and it’s good business practice to ask for net 60. No solvent shop would walk away from a designer on the basis of that being denied and would try to honor the more usual net 30 or in special cases request a small discount for payment within 10 days.

    Coming out of a global recession with pockets of pain remaining in some countries, in some sectors of the fashion business, many of the most respected businesses (retail and wholesale) experienced uneven cash flow and it goes all the way up and down the chain.

    Communication is essential and while no one wants to pick up a phone call asking where the check is, it has to be done simply and honestly. Things happen, and this business is way too small for “bad” guys to survive. Some shops that are teetering rely on their relationships, openly explaining that for some moments everything may be difficult. Some can accept them, encourage them and come out with levels of loyalty not seen since the more innocent days of fashion.

    Now … the entire chain is tenuous. Textile and trim manufacturers desperate to be paid from the designer. It’s tough. In many places, money is being printed by governments and is available for factors who can’t get away with completely onerous terms any longer.

    Bullies … not shop owners, not at all. In my opinion, anyway.

    madeleine gallay from Santa Monica, CA, United States
  2. perhaps your website can have a section where designers can post and alert others on the stores ad their terms and so on, while the stores can post about the late shippments and terrible condition they received the goods? sort of like a honer grading systems that websites such as ebay, or amazon has in place?

    i would love to have that kind of information before i made my decision to take an order or not.

    angry_deacon from Shenzhen, Guangdong, China
  3. Kudos to LN-CC for speaking out.
    http://uberchicmichi.com

    Style Cravings from Lagny, Île-de-France, France
  4. Excellent, Imran – nicely balanced article on one of fashion’s unspoken taboos. The one remaining issue to be discussed is the atrocious wages of editorial teams, particularly for independent publishers. It starts from the beginning, at internship level.
    Back to retail, and I can happily attest to one of the above-mentioned retailer ‘s open transparency in a recent transaction that was delayed. Yes, it took time initially to contact the Finance team. After many years as a freelancer, you learn to speak Accountant fluently – and, as Mary Katranzou explains, you remain firm. It’s your business that’s at stake, after all. The retailer was very prompt to resolve the situation and I would gladly work with them again.

    Paul Davies from Hove, Brighton and Hove, United Kingdom
  5. Very good article.
    Having worked in credit management for several years both in the USA and Europe, I can confirm the above.
    In the USA, I have even seen retailers placing orders when it appears from the start that there was no intentions to pay.
    Taking a 30% deposit is a great way to have yur manufacturing cost ( at least ) covered.
    However, I wish that Designers understand better how to vet a boutique and what coudl be a process for better credit management.
    Some have no application form, other no terms and conditions that make sense ( and remember that the one you use for the US is different from the one you use in Europe!).
    The business side of Fashion has to be taught.

    I also work with retailers on stock and people management. There is nothing worse than having the goods delivered late.
    Check an order form in the USA. See those 2 little boxes:
    “start ship date” & “end ship date”. Why? ( that needs to be part of another article ).

    Cash flow is critical to Young Designers and this is why we need to keep this topic high on the agenda and there are many ideas that can be put on the table.

    Thanks for the article.
    Hope you had a great Easter break and that you found many Golden Eggs!

    Thierry
    @exportfashion

    Thierry Bayle, London from London, London, United Kingdom
  6. Wish to apologise for the typing errors of the first response.
    May be spending too much time looking at my Golden Eggs.

    Thierry Bayle, London from London, London, United Kingdom
  7. Very good and balanced article. It’s good to remind retailers and new design housesof their responsibility to the other. Small boutiques (often with big reputations) are also often in the same seasonal cash crunch as the designers so dialogue is critical. Some big department in the US actively work with new design houses to help them grow – hopefully more take their lead! http://www.michaelhockey.com.au

    daviellewellyn@gmail.com from Brooklyn, NY, United States
  8. Having been on both sides of the fence – firstly as a designer with my own brand and then as a buyer for a major British department store – this article really struck a chord.
    The label that I set up with a partner straight after leaving fashion college lasted barely three years before we hit cash flow problems due to too many ‘sale or return’ deals with stores. Even as someone with reasonably good business sense, I was still too trusting of big stores – assuming that they would pay up on time because they were a well known brand. Had it not been for the fact that we also had our own store, and hence a direct to consumer route to market, we wouldn’t have lasted as long as we did do.
    When I then found myself, via a convoluted route, ending up as a buyer for a large store, it really opened my eyes to what goes on in large corporations. Shockingly bad administration and poor communication between accounts and buyers due to over-stretched teams and cost cutting, meant that I saw countless small businesses suffering in order to get exposure for their brand from a large store.
    Finally I couldn’t live with my conscience and I gave up the buyers job to set up a business promoting brands that manufacture in the UK. Through this I have also seen the issues that lead to late deliveries – designers that don’t know how to work with factories in terms of planning production, factories that won’t work with new designers until they have a few seasons under their belt because they don’ think that they will get paid, and the worst of all is smaller designers collections being bumped off the production line because a large retailer has come along and used their size and power to obtain priority for their order. This problem has become even more acute with UK manufacturers now that there is renewed interest in making in Britain.
    It is a chicken and egg situation, and having seen all sides of the story, I’m still not sure what the solution is. Certainly more thought provoking articles like this, that open everyone’s eyes to what is going on, should help – keep up the good work.

    Kate Hills (Make it British) from United Kingdom
  9. There are not excuses to let this happen. I understand that it might be a big risk for retailers to work with a young designer, who most of the people still didn’t hear about, although it is an abuse from retailers when they do this kind of “bullying” over the designers. They have a reputation and they take advantag of that to sacrifice other’s lives and works!

    http://maisonchaplin.blogspot.com

    Albert De Castro from Porto, Porto, Portugal
  10. Great article on an important and often overlooked topic. As an agent working with small young brands (www.n10-showroom.com) I have to add that another condition imposed by big department stores and online emporiums in London is the trade discount and the early payment discount (that is, if the store pays at 30 days net instead of 60 days net the brand HAS to give them 3-5% off). There is no way of opting out of these, as well as the 30 or 60 days net – these are big department stores that not only place nicely sized orders but also create a visibility that influences the decision-making of other retailers (one of my brands obtained over 20 new accounts in one season when it was picked up by Selfridges – as dire as their payment/discount conditions were it was worth it).
    The problem with nicely sized orders that come with 60 days net, though, is that they are indeed a direct way to a cash flow disaster. An order of £3000 at 60 days net is a lot less risky for the business than an order of £20000 at the same condition – yet conglomerates who ask for 60 days net tend to place larger orders, which is indeed a Catch 22. I have seen brands writing orders of 400k per season (not bad for a start-up) go under because they couldn’t afford to produce without deposits.

    Jana @ N˚10 Showroom from United Kingdom
  11. Thank you Imran for sparking this long due debate.
    Just a few things I would like to add:
    Speaking of Italy, Russia and Greece as difficult markets,there are reputable stores there, that have established strong business practices and stood by them, these stores have faced recessions also: in Italy, Biffi is one of them, in Greece Enny di Monaco is one of them and Le Form in Russia also. There are many amazing stores that respect small designers and pay their bills, even in places where the economy has been shaky.
    Colette from our experience holds an impeccable payment record and definitely supports young designers by respecting agreed payment terms. Colette definitely stands as an example of a cool store that pays its bills and always communicates promptly.
    Speaking about exclusivity, it often seems that the stores asking for exclusivity require this commitment from a designer but can drop the designer one day, without an explanation or without a thought for the designer who possibly declined other offers to fulfill the exclusivity. Exclusivity should also mean a certain commitment from a retailer to a small brand.
    Lastly, reading Mr Fraser Harper statements, I wonder if the deposits he mentions are paid to the likes of Rick Owen, Givenchy, Lanvin, Jil Sander to ensure that they sell to LN_CC and deliver early?Our showroom has not experienced the deposits that Mr Harper mentions, for our young designers. As of today one young brand has been expecting a deposit since October, and despite promises and numerous emails/phone calls, is still waiting for this payment. This same young brand waited for over 4 months last season to receive payment for goods delivered ahead of payment. Is this what Mr Harper defines as being a “responsible purchaser”? Four months for a small brand is a very long time to go without payment. As of today this brand is still waiting on payment and will not be on display at LN-CC and on website unless the invoice is settled, which means probably May at the earliest. How much of a selling window does that give to this small brand to perform? 6 weeks before all of London retailers go on sale! Is this fair to a small brand that works extremely hard to develop its business ?
    Now a client in LA, Moa Moore has emailed us today to let us know that due to a tight cash flow they will only be able to pay and receive goods from one of our brands in two weeks. This store communicates and explains its situation and our showroom feels confident about working with this store.
    Late deliveries, quality issues etc… are definitely problematic for retailers, however without a deposit how can small designers pay for production and endeavour to deliver on time well manufactured goods? Large brands can because they have the finances, they have established strong relationships with suppliers and factories, their production is always on the priority list. A small brand will always be at the bottom of the list if they cannot pay their suppliers and manufacturers on time.
    This is the snowballing effect that many small brands and showrooms know too well.
    Retailers are not blamed for all the challenges small brands encounter during their growth but this issue of bad payment, late payment, very late payment, difficult payments terms from the big retailers is nonetheless a very serious issue that is rarely brought out in the open. Everybody is too afraid to speak out because so much is at stake for designers and showrooms.
    It is time that retailers treat small brands/designers and large brands differently when it comes to payments terms. Large brands can manage with 30-60-90 days terms , small designers simply CANNOT without this impacting on their business.

    valery demure from London, London, United Kingdom
  12. I’ve spoken on retail’s abuses since ’08, it’s good to hear others. The reckoning is nigh for shops, trust me it will hurt.
    Retailers rigged the biz so they have no risk & all reward. Know what happens when players realize a game is rigged?
    Oh & as far as @theLNCC goes…If you can’t track & pay your vendors in 30 days, you’re incompetent & should quit now.

  13. sorry the store in LA is called Mona Moore

    valery demure from London, London, United Kingdom
  14. Wow – how refreshing it is to have been sent this article this AM.

    At last, people are beginning to discuss a topic which has been the plague of young designers globally and not just in London. A great read but really just the tip of the iceberg.

    As Ms Demure stated above, the lack of payment from stores leads to fit problems and late delivery times, how are these designers meant to buy the fabric (cash on delivery), grade the patterns (cash on delivery), hire fit models of numerous sizes (cash on day of fittings) and many more as well as covering the costs of the shows/presentations (as most do 100%), showroom/sales rep fees and PR fees (both demanded promptly at the beginning of every calendar month).

    The bottom line is that designers are the only link in the chain that who do not get paid immediately on completion or prior to the work being started and this has led to a sorry state of affairs in terms of who the designers are succeedng right now I.e all money – no ideas, all ideas – no money.

    Happily divorced from fashion from New York, NY, United States
  15. This is an important issue – congratulations for bringing it to the fore.
    We are a small boutique in Toronto dedicated to bringing young european designers to the Canadian market. We pride ourselves in paying all our orders before delivery and we don’t do consignment as we see it as an unfair practice towards designers. We believe in the designers we pick and support them. Sure, it puts the pressure on our cashflow but we see ourselves as proud supporters of young designers and their art. As a result we have very strong relationships with them, they agree to adapt some of their pieces to our clientele’s requirements, they do custom orders whenever they can and we’ve never had any issue with deliveries being late. Our clients love it, the designers’ and our business grow and everyone benefits from mutual support.

    Rue Pigalle from Toronto, ON, Canada
  16. I’m glad you guys are highlighting this issue. It takes intensive hours of negotiation on payment terms and close scrutiny of cashflow almost daily to make things work in the early days, then someone takes a huge liberty with you and the House of Cards comes crashing down….if the UK government gave small manufacturing businesses with big exporting activity a bit of a cushion on lending, we might be able to all fight our way out of the recession. Without it, one’s negotiating position is way too compromised to get shirty with retailers…

    Jules McKeen, London from London, London, United Kingdom
  17. Great article! Finally someone has the guts and intelligence to speak about a problem that plagues the fashion industry. The article goes far, but as an agent, i would have gone even further. The bigger and more renowned the retailer, the harder to work with. Most famous department stores now ask for Net 30 to 60 terms + discount (5 to 10%), putting all the risk on the young designer. Very well-known groups take months to pay invoices that must be so small compared to other, bigger vendors. And many well-known boutiques work with up-and-coming brands only on consignment, still asking for exclusivity! The industry has become extremely difficult to navigate for youn designers. Retailers should look at how Japan works – always half of the payment is made at confirmation, payments are prompts, there’s never a need to work on it for months!

    Julie from Halethorpe, MD, United States
  18. Excellent article, a very important issue to address. When I had my lingerie company it once took six months to get payment from a major French department store. Their excuse was that the weight of the package was not on the invoice.

    Alexandra Suhner Isenberg from Vancouver, BC, Canada
  19. This is indeed time to relook at the payment system within the fashion industry. Deposits can become tricky for both buyers and designers. Letter of Credits (LCs) is protection for buyers, but very costly for designers. Factoring is the same. When a small brand is first starting out, trying to sort out all the banking matters can be quite a struggle, especially when there are much more critical functions, like manufacturing, to work on.

    There was a time when the fashion industry has been slow to adopt new technologies, but now, things have moved on and opened up a lot more. Having worked with emerging designers in Asia and banking systems (separately) in our previous lives, the co-founders of TiVanity married the two items into a platform that has proven that things can be done differently. On TiVanity, an emerging designer and a buyer transact over an intermediary payment system (commonly known as escrow). After an order confirmation is placed, the buyer is required to pay 100% of the contract value into the intermediary account. The designer will be notified when the money has arrived, and he/she can proceed with the manufacturing/shipping. When goods arrive at buyer’s, they will have 10 working days to inspect and communicate with designer if anything is not up to standard or expectations. If all is well, the buyer will indicate on form that they are ready to release payment to designer. In most cases, designers get full payment within 10 days of dispatching goods. This is by far, the best protection for both buyers and designers.

    Vanessa Seow
    http://www.tivanity.com

    Vanessa Seow from Singapore, Singapore (general), Singapore
  20. Let’s all just come out and throw the biggest bully under the bus…BARNEYS NY has always been the biggest bully and worst payer within the whole fashion industry…phew!

    Hello Kitty from New York, NY, United States
  21. @ katie

    The solution is education. Designers should be taught business/finance at school. I cant believe schools are letting designers only study design centric subjects when finances is going to play such a big role if they are going to be independent.

    For the big retailers with bad adminstration practices please hire a accountancy consultancy firm like pwc or deloiite and let them set up a system. Sure it will be an upfront investement but it will pay off. You will have a much more clear pictures of the numbers.

    Somehow fashion has been slow adopting technology I dont know if it has to do with being a “creative industry” But you can have the best ideas in the world you still need the money to bring them to life.

    An from Den Haag, South Holland, Netherlands
  22. we do not belong to “THE POOR PAYOR” class, that of most designers are experiencing,…
    As far as our store is concern, we belong to the most consistent payer,

    The problem we are facing is that Designers failed to honor delivery window dates, and took us for granted.

    designers always put us at the back, always attend to us late and always delivers our orders last, a part from the other big retailers, and not attending to our orders, on time Why? is it because they always
    care for big retailers? who gave problem on payments?

    we always had huge credit note from designers, which we got out of items, that did not pass quality control, Credit notes are just a piece of paper, not cash, and they can use these credit notes for their cash flows in manufacturing their next seasons designs, pay thier staff etc etc…
    its about time retailers, demand designers to be punctual, and honor delivery window dates as agreed on Order confirmation.

    Carren from Riyadh, Ar Riyāḑ, Saudi Arabia
  23. Fantastic article,this is why I love BOF the content shows another face of fashion, you learn so much about the business. This article it gives a very interesting and clear insight on what goes on behind those apparently elegant and serious business people and fancy storefloors. No wonder sometimes you can see very talented people that never take off and why most designers, specially young promising ones, end up selling a huge stake of their companies to big investors or industry heavyweights like PPR (now Kering) and LVMH for example. However this sort of problem happens in many different type of businesses, and in other areas of fashion. For instance, I contribute as a fashion writer for several publications and I have to wait months to get paid for my articles, at the same time I need to stay present in print because as a journalist it gives me credibility. Same goes for producing and styling shoots for magazines: wait ages to get my check and the magazine while has been out for a while, if I spend any of my money for last minute extras it is a chore to get that money repaid. In the meantime I still have rent, food and my expenses to cover. Not to mention the pay is very bad and in many cases I have to find the images to illustrate the article. An international well know website (which I will not mention) took advantage of the fact that I was very interested in having an article published on their site and so I agreed to do it for free, the first time. Afterwards they ignored me because they did not want to pay for my contributions to the site…. And models, that’s another story, they go through very similar things when starting out and throughout their carreers (when they don’t get Gisele famous). All of this is why the rich just get richer, if they don’t pay up they always get to keep most of the money in their pockets plus the flow that comes in from the service you provided. The powerful taking advantage of the weak, rules of life. @descosido_

    Graciela Martin from Caracas, Distrito Federal, Venezuela
  24. @mariegrasser

    Excellent article Imran.
It is an important issue to address and this piece gives a very clear insight on that very delicate relationship between retailer and young designer.

    Having worked in executive business management for several years in a small flash sale business promoting European small brands in the USA, I can confirm:
    1 - There is nothing worse than having the goods delivered late (especially in the flash sale business)
    2 - Retailers are putting all the risk on young designers buy being bad payers

    In our case, we were asking for Net 30 to 40 terms and part of that reason was that the company was not PCI compliant (The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment). Thus, we had to work with an independent payment company and in most cases; the delay to get the found on our account was over 20/30 days. So, it was impossible for us to pay our vendors in a shorter term.

    I am not sure how retailers can deal with that issue as we’ve tried many times to resolve that issue and to get the found in shorter amount of time, without any success…

    I am pretty sure we were not the only ones facing that issue.

    Marie Grasser from Preignac, Aquitaine, France
  25. Not just retailers, I’ve heard many photographers and stylists being paid very late by major media, or in some cases, even unpaid….

    Sindy from Glasgow, Glasgow City, United Kingdom
  26. Sounds like a good concept but have you tried it?! If it works for you personally, you need to publish this at Minti, as well. backlink http://fiverr.com/twnseobacklink

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