Contracts Falling Through
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  1. #1
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    Default Contracts Falling Through

    Does anyone else have contracts fall through? How about going through the alphabet in revisions? Hear nothing for months then all sudden HOT HOT worlds coming to an end.

    Its pretty frustrating and stresses me out!

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  3. #2
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    I have several "blanket orders" with a bunch of finished parts that go back several years that will never be bought. When it's your best customer at the time it's hard to push the orders on them or take legal action.If I want to push the matter there is always another shop that will be glad to do work for this company in my place.

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    Quote Originally Posted by m98custom1212 View Post
    ........ Hear nothing for months then all sudden HOT HOT worlds coming to an end.

    ...
    If I wanted it tomorrow, I would have ordered it tomorrow.

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    It's like employees. You keep looking until all you have are good ones.

    (Yes, I know. Easier said than done.)

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    A contract is worth exactly what your ability to enforce it says it is. Anything that you make that only one customer can possibly use has no objective value other than scrap. Anything like that either needs to be paid for up front or you are gambling on the honesty and good will of the client, which is a sucker bet. Supposedly there was a time when certain companies' fiscal obligations and contractual commitments were good as gold, but that was when the dress code for sales reps required a fedora. Now it seems the larger the company the less trustworthy they are. And there's no guarantee that big companies were any less predatory back in some mythical golden age.

    At least I can lighten the blow by pointing out that we're in the race car parts industry when somebody in regular industry tries to get us to ship open account on the strength of his PO and I have to tell him we just don't do that (while trying unsuccessfully to stifle my laughter). So what if somebody decides to go elsewhere. If their purchase decision is based on whether they have to pay or not (and it might very well be) then better your competitor finds out.

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    Brief anecdote: My former father-in-law, call him Jimmy, spent a career in engineering and related management, in the days when if you scored a contract with a first- or second-tier defense supplier you were considered to have it made. He was representing the small outfit he worked for at some dog-and-pony show and he managed to go out for drinks with the guy who would be placing the order if one were to be had. He talked up the fact that his shop was small but staffed by really dedicated hardworking guys, blahblahblah...anyway he figured he had made a really sincere personal connection. And he had.

    The important dude leaned close, looked him straight in the eye, and said, "You know, kid, I really like you, so I'm going to let you in on a little secret. We don't pay."
    "Huh?"
    Smiling, "We don't pay. You need to know that."

    Jimmy said that he took the guy's tip to heart and just got out of there. Events later proved the guy had told him the absolute truth; they broke something like fifty shops one after the other. He never was able to figure out what made that heartless bastard take pity on him.

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    My biggest ever order got canned halfway through ,my customers' customer changed there mind so it ended about half way through ,there have been a few where I have been told a big job is on its' way and the need to get ready for its' arrival ,only for it to stop before it gets here.

    The worst part is when there is no official cancelation just relying on rumours that the parts aren't needed anymore.

    This is for a big company who have a clause in the terms and conditions to allow cancelling of orders at any point ,Luckily I haven't had one cancelled after doing the job but I have made major investment for a job that the order never came.

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    Agree 100%.
    I have had big companies pay in advance, 100%, in many fields.

    The onus is on *me* to explain why my low prices reflect my cashflow, and while I will gladly sell widgets, with 180 day payment terms, as a turnkey product, the project cost is 130% of part cost.

    Ie widget costs 100 prepaid.
    Turnkey widget, on your terms, installed to your spec, in your place, costs 230, net 180.
    Please indicate preference.


    Quote Originally Posted by Oldwrench View Post
    A contract is worth exactly what your ability to enforce it says it is.

    So what if somebody decides to go elsewhere.
    If their purchase decision is based on whether they have to pay or not (and it might very well be) then better your competitor finds out.

  13. #9
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    I have been in the machine business since 1982 . and have yet to land a contract , I must be doing something wrong. Blanket orders, I have received hundreds. And yes several have closed some of them with many parts in my inventory. And yes I have had to eat this inventory. To me its like going to Vegas, and rolling the dice. Just how much material and labor are you going to gamble ( to save set-up , and material pricing ) are you willing to risk, hoping the blanket order will be there next year?

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  15. #10
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    I read Dave Ramsey's book EntreLeadership recently, and he makes a good point about not thinking a contract on paper makes you safe. That a contract is to clarify all the details so that both parties can remember later what agreement they entered into. A contract will not make a dishonest person, or company, honest, and enforcing your contract in court will usually cost more in lawyers fees than the amount you are owed. I thought it was good advice to pass along.


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