Fonterra and supply chain finance
13 April 2017
Fonterra’s suppliers are a crucial part of our business.
Our overall goal is to have great, long-lasting relationships with all suppliers based on two-way communication and trust. We aim for more efficient processing, faster cash flows, and a better working relationship for everyone.
The businesses we trade with come in all shapes and sizes, and Fonterra works with them on various terms. We negotiate the terms of their agreement with us, to ensure that our mutual requirements are being met.
We are constantly reviewing our policies and approach to ensure we get the right fit for our vendors.
In Australia, where the Small Business and Family Enterprise Ombudsman is conducting an inquiry into payment times and practices, three quarters of Fonterra’s small vendors are on 31-day payment terms.
Globally Fonterra has a standard payment term of 61 days from the end of the month that the invoice was sent. However, we take the needs of smaller businesses into consideration and work with them individually to reach an agreement that meets their business’ needs.
Fonterra offers a number of options, including instant credit card payments for smaller purchases up to $1,000.
It is important to note that Fonterra does not have 120-day payment terms, and we do not offer loans to our small business suppliers.
Fonterra does offer vendors the option of receiving payment earlier through supply chain finance. Some of our larger vendors take advantage of this. It is a common approach by global companies.
Supply chain finance helps our business partners manage their cash flow by enabling them to draw down payment early in return for a small finance cost paid to a funder.
Fonterra offers supply chain finance through the independently-owned provider Prime Revenue. Fonterra does not benefit from the arrangement.