SINGAPORE: When Suzianna Mohd Sofiee tied up with homegrown multi-label retailer Naiise at the start of last year, sales went up more than when she partnered with other smaller retailers.
The platform’s strong presence gave her brand, Fen Perfumes, good exposure. It also provided a physical space for customers to smell the perfumes – something her online store could not do.
Seeing how brisk sales were, she then ordered thousands of dollars worth of new stock.
This became a problem when Naiise started missing the payments owed to her, which eventually added up to about S$2,000, Ms Suzianna said.
Although some may see it as a “small sum”, the 36-year-old said any amount is a blow to independent brand owners because "everything comes out from our own pocket".
“(Any plans to) churn out new products or restock - it’s all put on hold because all the amounts have gone haywire,” she added.
Her experience is consistent with other complaints against Naiise over late payments, which surfaced as far back as 2016.
Last Thursday (Apr 15), its founder Dennis Tay announced that the retail platform has shuttered due to financial difficulties, acknowledging that brand partners and trade creditors are still owed payment.
Products were sold on consignment at Naiise. Vendors like Ms Suzianna were to be paid only for the products sold, minus a commission fee, similar to how it works with department stores.
When Robinsons announced last year the closure of its last two department stores, some suppliers said they were owed thousands of dollars by the 162-year-old retailer.
HOW DOES IT HURT SMALL FIRMS?
Slow or late payments mean the hand-to-mouth existence of small brands has become even more pronounced, said entrepreneurs.
The payment performance of local firms hit an all-time low in 2020, according to the Singapore Commercial Credit Bureau (SCCB). It improved only marginally in the first quarter of this year, with the retail sector faring the worst.
“This is largely due to a rise in slow payments by retailers of general merchandise, apparels and accessories,” said SCCB.
Mr Kurt Wee, president of the Association of Small & Medium Enterprises (ASME), acknowledged that while the situation with late payments has generally improved over the past few years, “it is still a problem”.
“It has become something that people frown upon … but I think there is still room for us to try to reduce this.
“We have heard (even recently) that in certain institution’s procurement contracts, payment (periods) were six months,” he said, adding that anything longer than 90 days should not be acceptable.
Ms Gin Oh, the founder of lifestyle businesses MissHosay and ShinnPark, noted that slow or late payments happen “quite frequently” in the industry.
She estimated that at one point, she was owed more than S$10,000 in total by different companies.
“The money was supposed to be for cash flow, so we had to resort to borrowing money from family and friends just to support our staff and operations at the time,” said the 39-year-old.
“If you talk about over a year of delayed payments, you can’t really sleep if the amount snowballs. It does affect morale of staff in the office, and also plans to bring in more supplies using the money."
Mr Wee added that prompt payments also help to build trust. “It builds unhesitant delivery of services and products. It’s very important for business momentum and credibility,” he said.
WHAT CAN FIRMS DO?
When payments are late or non-existent, businesses complain that there is little recourse available to them.
They said they can approach the Small Claims Tribunal but that does not always guarantee any payment.
Any further legal action would come at a cost, which is hard to justify if the amount they are chasing is relatively smaller.
Heading to court would also sour the relationship, said Mr Wee.
Ms Dawn Bey, the founder of Pew Pew Patches and Minor Miracles, said: “Unfortunately, there is really no way out. The only thing is just to be on the ball with (chasing) payments.”
Naiise had owed her about S$5,000 from 2019, but before they wound up, she managed to get back half that amount by “hounding” them.
Her team sent the company emails every month and called them every day until they could provide a concrete payment plan, she said.
But she added that amid the many things to handle while running a business, this is the “last thing” an entrepreneur should have to deal with.
Ms Oh said one other way to prevent late payments is to simply stop supplying the goods once payment stops.
“We did that and we lost sales, but we had to bite the bullet and do it,” she said, adding that the move eventually worked and payments came in again.
Mr Wee said late payments are on the radars of business associations, and ideas such as the establishment of a payment code have been raised.
The situation is trickier if the company winds up. Other than Naiise, Ms Oh said she has bad debt with a number of multi-label platforms that have closed over the years, such as the Mad Museum and We The People.
Besides Robinsons, Ms Bey said she was owed money by Gallery & Co.
All this has made business owners more careful about who they work with.
“I feel safer with smaller retailers. They understand where we come from and they’re there to support us,” said Ms Suzianna, adding that she is also very clear with her terms of consignment with them.
But Ms Bey said that for larger platforms, there are few alternatives.
“Unfortunately in Singapore, there’s not a lot of sales channels or physical multi-label places to go to … And for any business, sales channels are important," she said.
“As much as a small business might have been traumatised (by late payments), you have no choice but to suck it up."