Cashflow challenges for reverse vending machine compensation

'This is my biggest worry right now, and something other retailers need to consider'

DRS deposit return scheme RVM reverse vending machine

Scottish retailers using a reverse vending machine (RVM) in the upcoming deposit return scheme (DRS) face greater cashflow challenges due to significant waits to be compensated for returned containers.

The Fed held a panel discussion at its Scottish Business Event in Glasgow last week on DRS, with the aim of providing better clarity to store owners, just five months ahead of its implementation.

Scheme administrator Circularity Scotland Limited’s (CSL) chief operating officer, Simon Jones, confirmed that stores using automated machines to take in returns from customers will receive their handling fee payment for returned containers within 30 days, whereas those taking them back manually, will be paid in seven days.

The Fed’s deputy vicepresident, Mo Razzaq, who has been using an RVM in his store for the past few years, described the length of time as his “biggest worry about the scheme”. He said: “The payment of the handling fee should be the same across the board, no matter how you are taking back containers.”

Razzaq explained his store is accepting 16,000 returned containers per month, meaning he would face £3,792 being tied up in deposits and fees not paid to him until a month later.

“This is my biggest worry right now, and something other retailers need to consider,” he told Better Retailing.

Even for manual returns, Razzaq explained the week wait is from the container collection from the store, meaning a store with weekly collection could still face a delay of nearly two weeks.

“They need to understand that small stores operate on seven days or even day-to-day in terms of spending and credit from their wholesalers, so waiting a month just isn’t feasible.”

Razzaq confirmed he will be calling for an urgent meeting with CSI to discuss the implications on independent retailers. Last week, CSL updated its website after being alerted of different timespans published on its website, with some claiming seven days, and others monthly.

At the time, a spokesperson said: “Slightly longer terms are now in place for locations with automatic return points and we announced an increase in return handling fees on 30 January 2023.

“As the scheme beds in, we will continue to review costs and payment terms to ensure we operate as leanly as possible and minimise the impact of DRS on our stakeholders.”

They advised stores uncertain about whether they should house an RVM to start with manual collections and assess demand after the go-live date.

They revealed that retailers will be expected to bag up containers and seal with a tag featuring a scannable barcode, and pay for the process, which has been accounted for in the handling fee.

Last week, Jones revealed the selection process for the bag manufacturer was underway, with each box containing between 20 and 70 bags depending on who wins the contract.

He said the prices of the bags and tags will be released in “the next couple of weeks”.

Read more deposit return scheme (DRS) news and advice


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