Payment terms changed.....to 120 days??

[alphonso]

I've had that experience. Weatherford (yeah I like to call them out by name, they can fight me in the parking lot if they don't like it) stretched us out to 9 months! It's literally criminal as far as I am concerned

I've bought machines from several places that Weatherford bankrupted with their pay policies. One of my customers was considering hooking up with Weatherford until Weatherford told them that they had to stop other jobs to run the Weatherford jobs first.

 

[wheelieking71]

He said payables, IOW, if you have been in business long enough, you have pushed your payables out at one time or another. Pay the little guys that need it, let MSC and National grid wait.
THe whole point of being able to pay on terms as a small business is flexibility. After over 30 years, yes there are times you have to push things out while you wait for some MF to send you a check.

Yea, I should have read that twice!
I don't use terms for anything. If I order something, material/tooling/coolant/ any consumables really, I pay at the time of order with my Amex.
So I guess technically you could say I'm on terms with American Express?
Vendors ask me all the time if I want to fill out the paperwork for a net account? I always decline.
Except for Ellison when I need haas parts. They just automatically put me on terms. I still call right when the invoice hits my inbox and pay with the Amex.

 

[Mud]

Yea I know the line everyone says," its your fault for becoming so dependent on 1 customer". Trust me, it happens before you even realize it.

Yes it does. 20+ yrs ago, I had mostly small motorcycle shops and end users for customers. Then a startup began using my product in their motorcycles. Their needs increased, we ramped up to accommodate. Cash was flowing, I was happy. Hiring. Buying machinery. Suddenly they were 60+% of our sales. 7 employees here, unknown how many there. We started to get paid later and later. Their usage projections never matched their needs, swinging wildly, due to chaos and mismanagement on their end. One day while I was trying to get paid from them, their purchasing guy said stop shipping, we are overloaded with inventory. So there was a 3-4 month period where we shipped them nothing so no invoices went out. Their office slowly issued checks for the old invoices, until all were paid. Purchasing called for a shipment, I said not until I get paid up front. They told me I was making a big mistake, and sent my product overseas to get copied. In the next 3 years they bankrupted and stuck other bigger players in the industry for millions. I looked like a dumbass when I cut them off, later I looked brilliant.
No special wisdom on my part, I got lucky and their chaos played into my hands. I still have parts made just for them here that will go to scrap someday.
My point is, yes it happens before you realize it unless it has happened to you before.

 

[Ox]

Coming up on 20 years in business. I've paid for everything up front. Except UPS. They do 30 automatically. I got my first credit card a few years ago.

From what I see, younger folks seem to use significantly less credit than older guys.

I don't think it's fair for you to play in this thread.
More and more I think that you must be some kind'a anomaly.
Almost like the laws of physics are slightly skewed in your presence. (???)

If there is one guy here that I would say could fall in a bucket of Shiite and come out smelling all rosie, somehow you would have to be near the top of that list. Good deals AND good opportunities seem to both fall in your lap at the right times.

I am sure that you make some of your own luck, don't git me wrong, but you seem to have been born a bit more of a winner than the masses. The rest of us mere mortals seem to have a bit more competition both when buying and selling.

Please read that with a smile. I am not digging on you in any way, other than maybe a wee bit' jealousy....


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Think Snow Eh!
Ox

 

[DDoug]

I don't think it's fair for you to play in this thread.
More and more I think that you must be some kind'a anomaly.
Almost like the laws of physics are slightly skewed in your presence. (???)

If there is one guy here that I would say could fall in a bucket of Shiite and come out smelling all rosie, somehow you would have to be near the top of that list. Good deals AND good opportunities seem to both fall in your lap at the right times.

I am sure that you make some of your own luck, don't git me wrong, but you seem to have been born a bit more of a winner than the masses. The rest of us mere mortals seem to have a bit more competition both when buying and selling.

Please read that with a smile. I am not digging on you in any way, other than maybe a wee bit' jealousy....


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Think Snow Eh!
Ox

IE:....We want YOU (Garwood) to buy the lottery tickets for the group...

 

[gustafson]

The world does not run on cash
It runs on the promise of cash

I see people in this business brag about paying up front paying cash for machines. i am not being critical, it is just that you need to make more money to make a living and you are always risking your money rather than as Danny DeVito said in the movie
Other People's Money

It does not mean you have to get way out ahead of yourself, but if I pay for material today that I run today, I need that money in the bank for a month before I get paid.
This 120 days and that crap is breaking the promise that was made, now I have to have that money[my money] spent for 3 months before I get paid.
No thanks

 

[Milland]

It does make one wonder if the CEO's and accountants of these companies would accept getting their paychecks 60 to 180 days delayed...

 

[Booze Daily]

Devil’s advocate…
But after waiting 60-120 days for their first check wouldn’t they get one every week after that?

 

[Milland]

Devil’s advocate…
But after waiting 60-120 days for their first check wouldn’t they get one every week after that?

Oh, it's better than that, since they'll get stock options and other returns besides the paycheck. But hey, when everything's against you, take what slender straws that float by, yes?

 

[Ox]

Devil’s advocate…
But after waiting 60-120 days for their first check wouldn’t they get one every week after that?

That is the part that they don't bother to tell you on TV when they are trying to sell you on their app that "gits you paid as much as 2 days sooner". OK, so that works once, but then it's still 7 (14?) days 'till the next go... You can't kleep getting a 7 day check in 5 days continually...

That needs to be said in the ad b/c the folks that they are targeting with that notion are NOT going to be able to come to that conclussion on their own!


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Think Snow Eh!
Ox

 

[Booze Daily]

Well, think of how stupid the average person is, then realize half of them are stupider that that.

 

[Garwood]

IE:....We want YOU (Garwood) to buy the lottery tickets for the group...

LOL. Never bought a lottery ticket in my life. Never gambled. Not once. I figure I need all the luck I can get just in my day to day stuff!

 

[Garwood]

I don't think it's fair for you to play in this thread.
More and more I think that you must be some kind'a anomaly.
Almost like the laws of physics are slightly skewed in your presence. (???)

If there is one guy here that I would say could fall in a bucket of Shiite and come out smelling all rosie, somehow you would have to be near the top of that list. Good deals AND good opportunities seem to both fall in your lap at the right times.

I am sure that you make some of your own luck, don't git me wrong, but you seem to have been born a bit more of a winner than the masses. The rest of us mere mortals seem to have a bit more competition both when buying and selling.

Please read that with a smile. I am not digging on you in any way, other than maybe a wee bit' jealousy....


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Think Snow Eh!
Ox

Probably not all luck. I definitely don't think I think like the majority of people. In some ways it's good- Like coming up with ideas for and figuring out products and finding deals on machines. But I'm also fantastic at underestimating or overlooking the complexity of something I've never done before and then slogging it out to "do it my way". I think that quality would really bite me in the ass if I did machinework from a print for other folks. I would regularly miss some detail or misinterpret the print and make the reverse of the part (Done that before). Products work well for me because I get to make them first, then figure out how much to charge.

I waited until my late 30's to get a credit card because I really hate the idea of debt, to a fault. Not because I made so much money I never needed it.

 

[SRT Mike]

Invoice factoring is a huge no no in my opinion. The fees are high and once you start it is hard or next to impossible to stop using them. Also you have to tell all your customers a new remit to address for the payment. Which is a huge red flag for your customers.

I've heard of business owners low balling and taking advantage of vendors that are factoring, they think they are desperate.

I am not saying to use a factor for regular receivables.

I'm saying if you have a customer that you like the work and the pay but their terms are shit and they won't negotiate, you can factor their invoices and add that cost back into their quotes.

Who cares if they think of that as a red flag... it's work you're otherwise going to pass on.

 

[john.k]

In my experience , a factoring contract will include all your recievables ,and they will cherry pick the easy ones ,and simply reverse the hard ones back to your credit bill at massive add on cost to you..........your customers will say "ullo' he's factoring ......wont last long ...better find a new supplier "..there is a good reason why companies like GE make more money out of commercial services divisions than any of their manufacturing legacy divisions.

 

[jackal]

I had a customer do this back around 2009. The jobs I did were $700-$1500 projects.
They were paying 90 days, but decided to go 120+.
The purchasing agent I was dealing with told me to add $100+ to the jobs.
Then my accountant told me to offer 4% discount to all jobs paid within 45 days.
They did pay some jobs early, but on the longer ones I made out ok.
With me being a 1 man shop it was ok, but this kind of crap could really hurt a company over big $$$$$ jobs.

 

[cnctoolcat]

Considering any machine shop worth its salt has been busy as the last few years, sounds like Eaton is digging a hole for themselves.

To make up for the Net 120 bullshit, current suppliers will just up their prices 10-25%. And most new suppliers will tell Eaton to pound sand.

Only a couple of our largest customers get Net 60, and they get phone calls starting around then. No product goes out after day 65, and they know it.

The other Net 30 customers get calls or emails around then as well.

The squeaky wheel gets the geese, and all of our customers know if payments are late, their phone will be ringing when necessary.

And I’ve told all of them that “we don’t sell to your customers, we sell to you.” So I don’t give a shit if your customer hasn’t paid you yet or not, that has nothing to do with our agreement.

Seems to be the classic excuse, “we’re waiting on our customers to pay us”. Gotta squash that crap early on!!

ToolCat

 

[Stirling]

It super sucks, but in the end it’s your choice what price you charge and what work you take.
If everyone disagreed to their new terms they would have no vendors and the tone would change. Simple as that.

That being said I really belive this practice should be outlawed. COD should be the only terms. If they want financing they should need to obtain it from a company that deals in finance and Is able/prepared to deal with delinquent payment offenders.
Any of us including Eaton are able to go to the bank for a working capital line of credit.

This would make debt more traceable, prevent company’s from overextending credit or straight up abusing it.

I had a neighbor (and customer…cc only) who runs a business. Starts accounts with EVERYONE! Never pays. Accounts frozen, ok. On to the next vendor, constantly. He does not care that bob down the road won’t sell him bolts or coffee, he will get an account in another town, province or even country. It’s absolutely wild.
Had a good friend go into management with him for 3 months. All he did was setup accounts and get angry phone calls. Saw the trend and bailed. Brutal.

 

[DavidScott]

Well, anyone do work for construction companies?

Standard terms there seems to be "you get paid after we get paid". I had a couple customers in the construction biz, and it was a bit hard to get used to, but they always paid, even if it ended up being "net 180 days".

Luckily for me, I was supplying them CAD services, so the actual funds investment was minimal. Still annoying to have to wait a relatively unspecified time for payment. But good fill-in work, and once a few jobs were in the chute, there were regular payments, even though they were from months before.

Yep, they were building the Montage Beverley Hills Hotel in 2007. I told them my terms were paid in full up front, before I started work. They said that was atypical for them, I said I bet we can work it out. We ended up breaking the order in half, with each paid in full before I start. It ended in late 2008, wana bet how much I would have gotten if I went with their terms?

I should add, this job was about 8 times bigger than the next biggest job of those years. Yeah, I really wanted it. It also turned out the POs and checks came from the stone fabricator, which would not have worked in my favor.

 

[john.k]

There is a law here called the "Subcontractor Charges Act"....it only applies to construction,but basically a subcontractor with overdue accounts can close down the job,if not paid.................doesnt seem to stop major developers going broke ,though.