Re: Corporate clients... once upon a time

Once upon a time, long, long ago (I believe in the 1980's or so) an accounting genius went to his bosses with an idea. It went something like this:

"You know we're a big, solid company with lots of payables going out every month and when an invoice is marked 'Payable Net 30 Days' we've been doing just that. So, what if instead of paying our vendors in 30 days we pay them in 60, 90 or maybe even 120 days? That would be just like getting an interest-free loan for those extra months and if we apply this to the hundreds of thousands or even millions of dollars in monthly payables, the amount we would have been paying to have this money in our cash flow becomes quite significant. And remember, this money, let's call it our 'float' will be ours to use interest free."

"But, " said one of the bosses, "If we stop paying promptly what are our vendors going to do?"

"Absolutely nothing," said the accounting genius. "We're the XYZ Corporation. Everyone knows we're good for it so if they want to do business with us they'll just have to learn to live with it. And since our credit rating is more a function of our balance sheet and stock price than anything else, what have we got to lose?"

"But what about the smaller vendors?" said another boss. "You know the little guys like the people who do our video and A/V work. They really need their money and they think they deserve to be paid in a timely manner."

"Oh, stop, " said the genius clutching his sides and barely able to speak through his laughter. "You're killing me. What are you some kind of monologue writer for Johnny Carson?"

The entire room erupted in laughter as everyone got up to go out for a three martini lunch to celebrate the accounting genius' promotion and bonus.

And the next month when the accounting genius was put on the cover of Accounting A-Holes Magazine all of his peers in other big companies read about this revolutionary technique for providing their companies with free money for their cash flows and the idea spread.

There now. Doesn't that make it much easier to understand?

But seriously folks... the one way that I've found to get paid quickly in big corporations is to have a close relationship at the top.

One of our corporate clients a few years back sent out a letter to its vendors announcing that effective immediately it would be paying "fully processed" invoices net 60. (The term 'fully processed' and similar wording means after everyone in the chain is through doing everything they can to slow down the approval for payment of a bill.)

Since I was hired by the company's president and have many of my dealings with him I called him with a great idea. "Hey, Bob," I said. "I just figured out how you can save a lot of money: simply tell your CFO that starting this month his paycheck will be delayed one month. Better still delay the entire accounting department. That'll save the company a fortune."

His response was to ask me to send all invoices directly to his attention and ever since each invoice has been paid in 7 to 10 days.

Doesn't work every time, but did in this case.