An article written to Accounts Payables Teams by a frustrated supplier.
For over 20 years my businesses have been suppliers to larger companies. My first business was a TV and Radio production company with recording studios in central London. Our clients were advertising agencies, record companies and we also worked with brands directly including the BBC, Sky TV and many within the Virgin empire. I even had to go to Richard Branson’s house once to tune Virgin Radio into his under-stairs sound-system!
As a small business with 12 employees we would offer these large companies’ 30-day credit terms without any financial checks. We would trust them to pay us on time, this trust was broken countless times.
Every Friday afternoon as the MD of the business I would man the phones and call the accounts payable team of the companies whose debt was outstanding. Eventually, I built up good relationship with the AP team. I would know which ones were going to lie to me and which ones understood the situation and would try and help us out with prompt payment. Although our terms were 30 days, we wouldn’t expect payment for 60 – 90 days, sometimes it was 120 days.
The usual line to fob me off was that they hadn’t received payment from their client and until they did, they couldn’t pay us. “I see, well my contract wasn’t with your client it was with you” I would utter to no avail.
As a small business owner, I would lay awake at night worrying about cashflow and could we pay our bills. The final straw for me and, one reason I decided to get out of the media industry was when we offered a large retailer over £250,0000 of credit to create and produce their Christmas TV advertising. The proposal document which they accepted included payment terms of 14 days with the final balance being cleared by the end of January. Considering this was for Christmas advertising, we were still chasing the last £25,0000 payment the following June. The excuse was that the invoice had not been approved yet. Eventually, after we instructed a solicitor, the retailer did pay every penny. Just three years later they went into administration.
The outcome was that we never worked for the retailer again and they burnt the bridges with a trusted supplier.
In the 90’s and 00’s the only option was to send around paper purchase orders or email an excel doc for approval. I like to think that if the retailer were still operational today, they would implement Zahara Software into their Accounts Payable. There would be no excuses about where the Invoice is in the approvals process or where the PO is in the system, the AP team would know. They could name and shame the colleague who hadn’t approved it or, run annual awards for most efficient approvers.
Companies would then have suppliers that were loyal and happy as opposed to deeply unhappy due to poor payment.
Suppliers - If you know similar companies that blame Invoice approvals for slow payment, ask them to make contact with me at Zahara Software.
