Saturday, June 14, 2008

Interest-free loans, courtesy of your tiny vendors


This is one of those times when Dilbert is really funny for the wrong way. I have been in the position of that tiny company, and I can tell you, it isn't pretty.


Sometime around 2001, call it two jobs ago, I saw that particular situation unfold. We had probably 100 people or so in our branch, probably 400 people in total. The big company (I won't call them a "Dilbert" company, they were anything but stupid) slowly increased the due policy for invoice payments. They had 22,000 people just in one of the divisions we did business with.


If you don't know what I am talking about, it is common for companies to invoice each other with terms like "net 15" or "net 30," which means that the invoice will be paid in either 15 or 30 days.


The bastards moved up to net 45. We said sure, whatever. Net 45 it is. We were living the high life of the dot com boom, who gives a shit if our receivables from our biggest customer slows down his payments?


Then the bastards moved up to net 60. Well, times are hard, it's all good. "They are bigger than us, and we have more clients, at least it's steady revenue."


Then the bastards moved to net 75. This is what is known as the shit hitting the fan. The layoffs started more or less at that time.



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