David Jones was months behind in payments to some small Australian brands before going into administration, suppliers say

In April, half of a 40ft shipping container loaded with premium water bottles, coffee tumblers, wine coolers, Eskies and other drinkware was dispatched to David Jones’s flagship stores, marking a major achievement for fledgling Australian brand Beysis.

For co-founders Ariana Hendry and Jessica Bryce, the restock worth tens of thousands of dollars showed how well the products were selling at Australia’s premier upmarket department store.

To keep cashflow moving, the Sydney-based small business agreed to a substantial price cut on the goods in return for 14-day payment terms.

Two weeks came and went. Then a month. Three months.

“The most frustrating part was the lack of communication,” says Hendry.

“I started trying to escalate it further up the chain, but it was just crickets, basically, to the point that about six weeks ago, I knew the writing was on the wall.”

Beysis is one of many small suppliers left out in the cold by David Jones’s slide into administration. It is stuck near the bottom of the creditor pile and unlikely to recoup its debt.

A similar experience faced other suppliers contacted by Guardian Australia, raising questions about just when the 188-year-old department store ran into cashflow trouble, before missed rent payments to Westfield owner Scentre Group triggered its fall into administration on Thursday.

Under a dual appointment, receivers FTI Consulting has taken day-to-day control of operations, while administrator McGrathNicol seeks a buyer or a fresh injection of capital.

Out-of-pocket suppliers now face tough choices about whether to keep sending stock to DJs, after receiving a letter asking if they would continue supplying during the administration.

For Jacob Leung, co-founder of Slowdown Studio, known for its artist-designed woven blankets, the fallout has been costly.

Leung sent a dispatch to David Jones’s major city stores a few weeks ago, and an invoice for almost $75,000.

The retailer was meant to pay Slowdown Studio on Monday, but the money never arrived.

“Maybe we’ll get some back, but it would be cents in the dollar,” says Leung.

“I would sell to them again, but I would definitely be changing the terms such as being paid before delivery, which a lot of the bigger brands can do.

“We’re pretty confident we can get through this, but it is putting a lot of pressure on us.”

FTI and McGrathNicol were contacted for comment. A creditors’ meeting is expected to be scheduled for next week.

Small suppliers are among the most exposed to the fall of David Jones, given big luxury brands often operate through dedicated concession stores within the department store, retaining control of inventory. They can also negotiate better payment terms.

David Jones offered small suppliers tiered payment terms stretching out to about six months, with brands forced to accept ever-deeper discounts to get faster payments, according to several businesses contacted by Guardian Australia.

Small suppliers have been told they have no legal grounds to take back their products even when invoices have not been met, although David Jones is still selling the stock and keeping the proceeds.

When well-known brands such as Gucci stripped their products from the retailer’s shelves on Thursday, they generally did so in case David Jones immediately closed its doors, leaving their products locked up.

At the Beysis warehouse in the inner Sydney suburb of Ultimo, co-founder Jessica Bryce says the missing funds are a blow to the business, coming right before the retail sector’s busiest trading period.

“The fact that we don’t have this money coming into Christmas has affected how many casuals we can put on, how much marketing spend we have, and how much inventory we’ve been able to purchase,” says Bryce.

“It is particularly devastating for small brands like ours because we’ve just been completely forgotten – it does actually hurt.”