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At end of quarter big companies don't pay. What can one do?

pal's machining

Aluminum
Joined
Oct 8, 2002
Location
owatonna mn. 55060
Doing work with some larger companies and when it comes close to the end of their fiscal quarter payments get slower and slower at comming in. They must to this to make it appear that they have high cash on hand making their stock report more impressive. Other than stopping delivery untill their account is current what can one do? Is there something in Sarbanes Oxly bill which passed after Enron to prevent this (fraud?) to the stockholders? If so who would one contact? Attorney General, Senator, Stock Exchange, IRS, SEC?
I would guess many of you shop owners have seen this and your usual 30 day terms go out to 60/90 plus days at the end of the corporate giant year end. For this to work for them every quarter end to show improoved cash on hand they have to stop sending out payments another week earlier! Then to see the checks come in dated on proper payment date but not sent out untill December 30th or at the end of their quarter.
When they purchase from China I believe that the China vendor gets paid as soon as it clears customs which is faster than I get paid!
Any Comments?
 
If you wanna mess with the Big Boys, ya gotta play their game.

Figure it this way, you are going to get paid. Yes it will be late as hell, but you will get your money.

Now, you cold do work for the walk in's and the shoe string operations and end up not getting paid at all.

Or you could make mechanical widgets and sell them for cash at the craft fairs.

Machine shop is fun, business is ugly.

Sarbanes-Oxley isn't there to protect you from any kind of "fraud". You are not being defrauded, you are just being pushed around by someone who is bigger than you are.

He who has the Gold makes the Rules.
 
No answer for you Pal's, same problem here, 90 days in the norm even if all the paper work says 30.
They must think since my company name is ATM, that I'm a bank.
 
My company has an interesting approach . . .

Our bookkeeper calls the accounts payable person of every single company we deal with. She gets to know the person (you need to be an extrovert to do this) . . . she winds up knowing when their birthday is, how many kids they have, if they have a pet, etc. She sends out a birthday card from time to time, sends a note of congratulations when one of their kids graduates, etc. She treats them like people like to be treated.

She always calls them when she sends out an invoice. She calls them a week "BEFORE" it is due to see how they are doing - making sure they are happy with our products, etc. She double checks with our engineers to make sure the customer isn't waiting for a manual or for some software bug to get fixed.

We always get paid on time - we have had as much as $800k out at a time and never had any significant portion go beyond 45 days. This goes for Boeing or Georgia Pacific as well as it does for the little mom and pop place across town.

When a company is having problems paying - we always get paid FIRST . . . accounts payable people take care of the people they care about.

Doing business is a personal thing - depersonalize it at your own risk.
 
Ken- You're one of the smartest people I know. Wise enough to know that hiring the best people and paying them well pays off for you too in the long run. I can think of some companies around here that could take lessons from you. They hire the most incompetent employees possible, pay them as little as possible and then are shocked at the predictable, terrible results.
 
Motion Guru
You have deffently hit the nail on the head.
My biggest pet-peeve is "it's not personel it's business" Well I'm a one man shop so if you lie to me or don't pay it's personel!
 
I have had lots of promises, contracts, and such. Sometimes they pay, sometimes they don't. If I have something substanital, then I am happy to provide when we are paid. Progress payments are required. I do not run a McDonald's.

--jr
 
A good friend of mine runs a commercial collections agency. That is he collects from busineses only, not individuals. He *can* get blood out or a turnip. If you are having some problems that need professional assistance let me know and I will hook you up.
 
Interesting it should come up. I was making a part for a guy, he paid me $2.50 each(200-300 pcs at a time). There was very little for me to make on it. He said he couldn't budge on price. I went around him to see what his customers were paying. He is reselling them for $8.00. You have to turn him upside down to get paid. Needless to say his customers are soon to be my customers. If he would have given me 3.50 to 4.00 I probably would not have questioned it. Another thing that irks me are the guys that need it in 2 days and pay in 75.
 
This is very interesting.I used to own my heavy equipment and have to quote jobs,the only problems I had were companies that leased machines and would work basicly at cost just to make the payments.Guys like myself didn`t want to tear up our machines so now we are out.Isn`t buisness fun?
 
Doing business is a personal thing - depersonalize it at your own risk
I suppose so, but of course if everybody did what your gal does, then it would be right back to how it would be if no one did what your gal does. Just seems a shame to have to sweet talk your way in business just to get done, what should be done anyway.

I mean, your gal doesn't *really* give a rat's ass about when Tiffany in accounts payable's daughter gets her braces off, now does she ? ;)
 
You have to realize most of these companies think you are so very priviledged to have an account with them. The big company is very happy to pay some moron (with a degree in golf) the big bucks, and he gets his big fat check every other Friday without fail. You, on the other hand, will get paid whenever they may feel like it.
 
I mean, your gal doesn't *really* give a rat's ass about when Tiffany in accounts payable's daughter gets her braces off, now does she ?
If she didn't care, I would find someone else to do the collections. Human nature says I will never have the problem of everyone treating others like they care.
 
If she didn't care, I would find someone else to do the collections
So when she quits your place, she'll still call up Tiffany just to chat ? :rolleyes:

Human nature says I will never have the problem of everyone treating others like they care.
True enough, but it still irks me sometimes that the folks that are best at sweet talking BS are the folks that get done, what should have "got done" without it being necessary in the first place.

Having said that, you are correct in employing this tactic to get paid. If I was in your situation, I'd probably like having a gal like your gal to speed up payments. Suppose the difference between us is I wouldn't be "proud" about the fact, but see it as one of those slightly annoying necessary costs of doing business.

I'd be rolling my eyes every time I heard that perky voice asking Tiffany how the soccer game went, and "oh by the way, have you sent the check yet ?" but then smiling as I opened the envelopes with checks in them !
 
You wear your cynicism well! I don't think our bookkeeper is as swarmy as you are imagining. And as for whether or not she really cares - every once in a while I hear stories about how she and her husband went to some dog show or visited someone on vacation and it turns out that it is some vendor or customer that she has gotten to know.

I read a "collections manual" by a guy named Abe "Walking Bear" Sanchez . . . at first I thought it was hype, but he had a few examples of how people like to be treated when they are shelling out money and it made sense, he advocated hiring someone like this and changing your attitude about collections. Collections have never been a problem since.
 
I was manufacturing tapping machines from about 1989 thru 1999, sold thousands of them at average sale of $3,500. Ninety percent of sales were Net 30. Most sales were to the larger corporations, a few to the government (some strange sales like the FBI !) since, like the Versamil, the machines were kinday "pricey" for what they were. In all that time, never* employed the "sweet talk" tactics, just called and politely asked about when the check would go out, if late. Never had a problem, only lost 30 bucks in all that time.

But I'm guessing from your previous posts, you're in a different league with much higher average billings, so perhaps the "butter up" approach is necessary for your situation with much higher dollar amounts on the line, more difficult to pry from Tiffany's little hands.


This whole subject reminds me of another business related "person to person interaction" matter I've been meaning to post about...concerning the effectiveness of multiple sales calls to follow up on leads...i.e. does "pestering" actually "work" ? I'll start another thread on that soon.

*at least not to my knowledge. My wife did most of the calling and pehaps she did slip some sweet talk in when I wasn't listening !
 
We made and sold products into computer stores all over the world in the early days of consumer computers. We got to know all of our distributors and major dealers. We were interested and cared for them a great deal. We all had a common interest and worked together to support and have repeat customers. It does make a great difference.

Then, there can be too much. Drawing the line somewhere is required. If you don't, then your kids won't get the braces.

It's the Doctor's patient relationship problem. Where to draw a line.

The other day I had lunch with someone who was part of a five man engineering desing company in Austin. Their major client had them stretched out for a year on some projects - and still wanted more work on projects from them. He was no longer with the small engineering company - I do not think they exist now. Their "major client" also put our really crappy evaluation boards for their new semiconductors. People were not very happy with them, at all. Is there any supprise?

Don figured the right angle and client base. It's changed a lot in the marketplace over the past few years. When it gets to paying bills, comptrollers are only rewarded by how the "hold money in" the company. If the vendors are shafted, or something does not happen right on time, then that's fine - "not my problem" is the attitude. It is, of course, their problem.

"Welcome to Wal-Mart" has also changed some things. All purchasing activity, especially.

I still think it important to know and support your customers. Won't any if you don't. But,as the Doctor says, there is a line.

--jr
 
My shop has the normal 30 days payment posted on the back of all our work orders and project orders. Except that right after the 30 days it also has the interest rate charged for late payments. After the 30 days late it gets rather significant. And yes the contract has held up in a court of law. Quite regularly actually.

Oh.... by the way I should tell we are owned by the big boys. The name of who owns us is Emcor.

So as you were saying about playing the big boys game, your right play there game and send it back at them. We've actually had people copy our terms contract and use it.

The other side of the coin is that they give a small price break for early payment. I think its about 1% for payment in less than 3 days.
 








 
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