CHS restores credit status with vendors

Suppliers agree normal terms in negotiations forced by cash-flow problems at the distributor

Distributor CHS Electronics has secured normal credit terms with most of its suppliers, despite admitting that it experienced cash-flow problems in the first quarter of the year.

CHS admitted that credit terms with its suppliers were placed under severe strain because its stock level was too high, forcing it to renegotiate terms with vendors.

Alison Heath, sales director at CHS, said: ?Our cash situation has improved and we have a lot of stock but the position is better than it has been.?

She added: ?We had a short-term cash problem but we are now over it.?

The problems emerged after CHS settled a $70,755.92 debt with its former partner D-Link, after the vendor issued a High Court writ on 25 April.

Peter Rigby, networking general manager of CHS, claimed that D-Link was not prepared to work through its problems with the distributor and had therefore issued the writ.

CHS claimed it had paid off the sum in full but said there was still a small outstanding writ with Merisel ? which CHS bought in September 1996 ? which was under discussion.

Mike Gill, managing director of D-Lin, said the company had resolved its issues with CHS.

Heath admitted that Microsoft had previously put CHS on credit hold, but said although CHS had paid its bill on time, there was a misunderstanding and the distributor was not able to buy Microsoft stock for a couple of days.

Rigby claimed that CHS UK had managed to trade during the first quarter without the aid of its US parent company, although each subsidiary can use a cash assistance operation based in Switzerland.

It is anticipated that CHS will shortly announce the final price it will pay for Merisel?s operation as there was a high-level US meeting taking place last week, as parties reconciled the stock situation.

CHS had previously stated that it would pay $160 million for the operation.