Here is an interesting side effect of the Great Recession – we have started evaluating our suppliers by how they have handled collections with us. Let’s face it, we’re all working to manage cash flow during this recession, and at times it is a lot tougher than we would like.
Throughout this period we have seen terms of sale change, sometimes dramatically. From some of our suppliers we have gone from no deposits or 50 percent deposits to 75 percent deposits or full payment in advance. On the other end, some of our clients have moved from paying in 30 days to paying in 60 days, 90 days or longer.
So, all that does is stretch us and cause cash flow to be the primary focus of management meetings. Forget about financial planning.
This is about who we can pay how much today. It is a much more reactive environment rather than proactive. Not exactly the way you would like to run a business, but some of us are in survival mode here. What family spends time planning a summer vacation when they can’t pay the food and utility bills?
Through all this, it has been interesting to see how our suppliers have handled the tighter cash situation. Some have been very creative and very understanding. Some have been downright evil. Our accounting team fields the vast majority of these calls and emails, but occasionally they reach my office.
Some callers have been extremely rude and demanding, without first even listening to what I have to say. Others have gone out of their way to understand our situation and work with us to come to an equitable solution. Believe me, I fully understand that we all need to be paid for the work that we do and in a timely manner. The issues some of our suppliers are having with us are the exact same issues we’re having with some of our clients. We get it. But we also realize that we are in a completely different time than we were two years ago, and the game has changed.
About a month ago, I sat with our controller and one of our key suppliers who we spend a lot of money with over the course of a year. He came to us with a very creative solution to handling late payments – a solution that spoke of his desire to continue to work with us and yet work to reduce the past due amount. We agreed to a plan and have been working to clear his account as quickly as possible.
On the other hand, we have several suppliers who seem to have made the decision – consciously or not – they do not wish to have us as a client judging by their approach to collections. The unfortunate aspect to this is the salespeople calling on us are typically not the ones involved in their method of collections, and they stand to lose a significant account.
That’s where the balance seems to be out of whack. We all need clients, and we all need to be paid by those clients. So, somewhere in there is a balance between how we approach clients with past due amounts to collect the money and yet still maintain the relationship for future business. It would seem to be pretty short-sided to push so hard for immediate collection and lose the client in the process.
We will persevere and we will come through this, and we will pay everyone what we owe them. And when that is over, we also will then evaluate our supplier relationships based on how well we worked with each other through this tough time. There will be suppliers we chose not to work with again, and there will be those that gain a greater share of our business because of the relationship that was built in this time.
I certainly do not expect any of my suppliers to forgive any of our debt to them just as I don’t expect to forgive any debt owed us by our clients. What is truly telling, however, is how each of these companies approaches the client/supplier relationship. If we work together, we’ll all come through this together; if we become adversarial, we’ll all go down together. Which would you prefer?
See you on the show floor.
Jim Obermeyer has been in the tradeshow industry 28 years, both as a corporate trade show manager and exhibit house executive. He is a partner in the trade show and event marketing firm Reveal. He can be reached at email@example.com.