Fair Payment Terms

Sandqvist is a Swedish bag brand which consciously works long term with very few suppliers. They collaboratively agree production timelines with their suppliers, based on available capacity. Their contracts outline the commitments of both parties. The buyer commitments in the contract include not making any changes or discount requests after the purchase order is agreed, working with the supplier to collaboratively agree upon fair prices that cover at least minimum wage and benefits, continuous improvements as well as taking financial responsibility for materials purchased but not used in two years. If proforma invoicing is preferred by the supplier, the supplier invoices when purchase order is confirmed and 50% is paid within 2 weeks and the rest is paid 30 days after the products are shipped. The purchaser is responsible for on time payment and if there is a late payment, a fee based on actual costs can be negotiated to be paid by Sandqvist. Penalties are kept to a minimum, and they only charge late delivery penalties if it can be shown to be the fault of the supplier only.

H&M recognises that it’s a common problem in the industry that manufacturing facilities have to bridge the gap financially, and sometimes need to pay for labour, overheads and materials before the order is paid for by the buyer. They have worked with a third-party financial institution to provide a trustworthy credit facility, which means the supplier can receive the money as early as 3 days after invoice, with the system automatically checking the order against the invoice. Over 60% of H&M’s suppliers use this facility and have given very positive feedback. On average, suppliers receive their money 15-20 days after invoicing, including those who use the credit facility.