Apple makes suppliers wait 83 days for pay

Story demonstrates Apple’s ability to play the system and make a profit.


While news has been focused on Apple’s disappointing financial results, there is another story that demonstrates Apple’s ability to play the system and make a profit.

A Wall Street Journal report, via twua, notes that Apple has such a great deal with its suppliers that it doesn’t have to pay them for 83 days. Even better, Apple receives payment from customers after 18 days, so the company is actually sitting on the cash, receiving payment for products well before it pays its suppliers.

The report claims Apple paid to keep only four days of inventory held for the whole of last year. In comparison, in 2010 it was holding 10 days of inventory.

Gartner's annual Supply Chain Top 25 league table showed that Apple sells all its inventory every 4.9 days.

It is thought that Apple has the leverage based on the high demand for its high profit products.

Since it is not Apple that manufactures its products, but overseas companies, those companies take on more of the financial risk than Apple. This may explain why the Asian stock market fell after Apple’s results were announced.

In Asia the Nikkei Stock Average dropped 122.19 points off the back of Apple’s financial results, as component manufacturers for Apple products faced pressure: Sharp tumbled 10% to Y260; Toshiba fell 7.3%; LG Display dropped 4.8%; Sharp lost 10%; and Hon Hai Precision declined 4.3%.

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