Fashion Week: Slow Payments Pinching Small Designers

When Gary Wassner watches a fashion show, he has good reason for making sure the clothes look sharp: his company's money is at stake.

Wassner is president of Hilldun, a garment center company that provides financing and factoring services to small and up-and-coming designers, especially companies with sales between $2 million and $5 million. These businesses don't have deep enough pockets to wait for retailers to pay for goods, or the clout to prompt fast payments. So they turn to Hilldun, who acts as a middleman, paying the designer at the get-go for most of the merchandise's value, and then collecting the payments from the stores, for a fee. The arrangement typically calls for Hilldun to fork over 75 percent of the money to the designer initially, and the balance after the retailer pays.

But in this weak economy, payments are coming more slowly. Wassner said that over the last six months, many retailers have started running 15 to 20 days late, stretching payment terms from the usual 30 day window to as long as 60 days. That puts pressure on both Hilldun, to chase down payments, and designers eager for every dollar owed.

"It takes more work and slows cash flow for designers," said Wassner, who was in the front row at Yeohlee Teng's Monday afternoon show.

When he's at the shows, he said, he doesn't just look at the aesthetics of a collection.

"I also have to think of marketing and construction," he said. "I hate to see sloppy fit or construction--if it looks bad on the runway, that's where my problems come in if I'm financing the company. "

He had already spotted oddly fitting clothes at one collection--possibly an intentional design flourish, but questionable enough that he planned to take up the issue with his client after the chaos of Fashion Week.

"I'll tell them, you can't do that, that's unacceptable," he said. "Young designers don't get second chances--if a shipment is lately or poorly constructed, there are a lot of other people out there."

by Catherine Curan
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