Good to see that you are taking a firm stance with your clients, and acting to prevent problems with bad and doubtful debts right from the start.

Thanks for your insight about the effect of information technology in this matter. Being a technology cripple, I can’t comment much on that, except to say that it is yet another example of the impact on technology upon business practices and life.

As you know, I am a technology cripple, and so I can’t

Andrews last blog post..Must you pay on time when you’re short on cash?

I take 90% of my payments by direct deposit into my bank account which my clients all do by Internet banking. The other 10% is mostly PayPal and the occasional old-school client who insists on sending a check, even if it means a delay on starting their design.

My suppliers are all the same – they all require payment in advance for the services they provide and if you don’t pay by the due date, the service is cut.

It’s simple and efficient. The payment can be made from your desk, and they’re usually very fast. In the case of PayPal it’s instant, and Internet bank transfers are next-day. There’s always a record of the payment, so there’s never any confusion or dispute from either party.

I realize that not all businesses have this luxury. In some industries where competitors offer 90-day terms it would be difficult to retain customers if you required payment in advance. But I think things are moving this way. With online shopping (with credit cards), Internet banking, and online bank accounts like PayPal, people are getting used to faster payment and paying in advance.

I’m personally very happy about this trend. It has so many advantages over the older systems, and obviously that’s why it’s adoption is so rapid. Goodbye to the paper check, paper statements and ‘accounts’. Welcome to managing your money in the Internet cloud!

-Lee

Welcome to my blog and thank you kindly for your comment.

Your point illustrates how dysfunctional behavior can result where dysfunctional behavior can result when individual departments focus their priorities too narrowly, without sufficient regard for the overall impact of their actions from the perspective of the entire organization.

Your suggestion that A/P should report to the head of purchasing would appear to have some merit. Purchasing departments must be free to procure the most suitable products or services available. Under your suggestion, the head of purchasing could refocus the priorities of A/P to support the bigger picture of the procurement function by paying bills in a prompt fashion.

Andrews last blog post..Why firms should pay bills on time

If A/P reported to the head of purchasing with the controller acting only as an adviser and well… a controller, A/P would be able to see the big picture more easily.

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Not being paid for twelve months? That’s appalling – how are you supposed to run your business under such circumstances?

That type of behavior shows a flagrant disregard for any form of professionalism at all.

Whilst I would imagine that their are considerable benefits to the franchising model, I would also imagine that one serious drawback would be a high level of dependence and reliance upon the franchisor, which would be a very serious problem in cases where the franchisor either cheated you themselves or were lax in any effort to assist you in terms of the process of collecting debts owed by large corporate clients.

Andrews last blog post..Why firms should pay bills on time

I’ve struggled to pay bills many times because of big companies not paying. Can you imagine trying to run a business when folk aren’t paying you for 12 months plus? Moral – never buy a franchise then you have a lot more control over your debt collection.

Your father was obviously a very wise man.

Thanks for your view on the positive side of the equation. As you note, my discussion above described the negative consequences of not paying on time, but the flip side to this are some very positive consequences, as you mention, for those who make a habit of prompt payment.

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