Our long term contracts continue to play a part in this. They can act as collateral for suppliers to get short term loans from credit providers, which means cooperatives can pay their growers on time.
We’ve also worked to further shorten some of our payment terms. Traditionally we had a maximum 35 days payment period on most of our tea contracts. However, our coffee contracts are on a ‘net cash against document’ basis – so we send payment as soon as we receive the appropriate documents. Through the pandemic we’ve offered our tea suppliers the option to change to NCAD.
In the last few months, six of our tea producers across our supply chain in India and Africa have taken up our offer. It’s helped them with liquidity at a time when global logistics is a little slower than usual, meaning their tea gets turned into cash quicker which they can reinvest in the business.
Shortening payment terms like this may seem a simple change, but it can have real impact for those who need it.