Early Payment Discounts Get Chopped

Here’s another reason paper could soon cost you more: Several of the major mills — including New Page, Verso and UPM — have changed their early payment terms by reducing the discount from 2% to 1%.

Most coated paper distributors and end-users receive a 2% discount if they pay within the discount period — typically 10 to 20 days depending on the mill, says Dan Walsh, vice president of catalog/publication papers at distributor Bradner Smith & Co. The discount reduction is a first for the paper industry, but Walsh expects other mills will follow suit.

“This could be a significant increase on very large orders,” Walsh says, so it’s not good news for distributors/brokers or end-users like catalogers and publishers.

The reduced discount will affect smaller catalogers as well as large mailers. “In many cases, paper distributors use the discount from the mills to offer a lower price to the cataloger,” Walsh says. “Now that this discount has been halved by the mills, it will be harder for distributors to offer a lower price, so it will have an effect on all catalogers to some degree.”