Monday, February 18, 2008

C.W.O. The PubCo 'Supermarket' style behaviour.
Gobsmacked. Cashflow Shock. Screws turned ever tighter!

Gobsmacked. Cashflow Shock. Screws turned ever tighter!

It's been asserted to me recently that cash with order (CWO) is very common with some PubCo's. Particularly for people who have been in arrears at some stage with their beer supply due to cashflow problems, whatever - direct debit was stopped, CWO introduced to get account back up to date. Then CWO remains state of affairs 'in perpetuity', as we say in the incensed trade.

Look at it like this:

PubCo negotiates (forces more like) 90 days credit from nominated beer suppliers. PubCo negotiates (forces more like) £200 plus per barrel discount on volume. Brewers provide, at own cost, call centres to handle orders, deliveries and accounts for PubCo. PubCo contrives to get as much of estate on CWO:

Lessee orders beer on Monday for delivery on Thursday. Lessee gets (as all the PubCo's say in their literature), ahem, a 'generous discount' of say £50 per barrel (mine is £42,24) and pays cash over the counter into PubCo account three days before delivery.

It seems on the face of it that PubCo makes more money out of beer than the lessee, or the brewer for that matter, without ever even touching the beer. Very neat. How did that happen?

I'm not an accountant. Could someone, perhaps an advisor, please work out how much this cash flow into PubCo coffers is worth annually?

And explain how an individual publican can afford to buy product before they sell it? Standard business practice is to buy a product apply a mark up and sell it at a profit. Gain credit and extend your cash flow to make your business work more efficiently. And how the PubCo can justify this Dickensian practice when most other suppliers to the trade are on 30 day credit terms?

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