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It's worse than that because they will drag out payment after the term has passed. My first job out of school was for a mom-and-pop manufacturing company. I go
by analog31 4y ago
It's worse than that because they will drag out payment after the term has passed.
My first job out of school was for a mom-and-pop manufacturing company. I got an inquiry one day from a very well known company, and mentioned it to the boss. He gave me a long lecture about why we didn't work with that industry. They were notorious for stringing their suppliers along and holding them in a sort of debt bondage. I remember responding with a FAX (yeah, that's how it was done) explaining our terms: Pay in advance. The boss made sure that the business was never beholden to a single large customer.
We also had a draconian, hair-trigger, credit hold process. I remember overhearing the scheduler / receptionist telling a customer: "You are on credit hold right now, we can't schedule your next production run."
- Ekaros 4y agoThat to me sounds like we might lose revenue, but at least we are unlikely to lose money.
- analog31 4y agoIt becomes a problem if you borrow to pay for tooling & plant in anticipation of getting paid for product. You might lose your shirt.
- fbdab103 4y agoCash flow is the be-all end-all. If you cannot make rent, you are done. Big business does not care. Working for a big business, I have encountered other small companies who do not want to deal with us - getting $MEGACORP to pay their bills on time is a foreign concept.
- monocasa 4y ago> gave me a long lecture about why we didn't work with that industry. Automotive? That has big automotive energy.
- grumple 4y agoI think this is needed tbh. My fortune 10 company regularly pays our bills after the pay period - like 60 days late on a net 30. And then I, a technical person that just wants the damn AWS bill paid so I stop getting emailed about it, have to chase down the people responsible internally, even though they get the same billing emails. Because for some reason they didn't like the old way of setting up auto pay. Oh. And they will send literal paper checks to pay some bills... to closed offices since everybody works from home now. The accounts payable department wastes more time than they save.
- mrandish 4y agoYep, when I started out in business I focused a lot on price (and hence our margin). I then learned that with large distributors / customers the more important aspect can be the terms because "terms and conditions" of sale can make an order not an order, a payment be delayed months and even the price paid not how much you receive.
- ZephyrBlu 4y agoI've heard of enough similar stories that if I was ever in this sort of position I would be factoring in the risk that the large company decides to not pay.