I have operated my own small businesses for nearly 25 years and I have a theory: the problems remain the same, only the amounts get bigger.
I am a small business professional working, in many cases, with the largest businesses in the country – FORTUNE 500 territory.
Our small business is buying the same products and services that the big guys are, only we’re paying more. And I’m fine with that. My Fedex rates, my technology costs, my long-distance – you name it, I am fine with paying the going rate, because I know most of my suppliers give us modest discounts off our modest purchases, in an effort to command my modest loyalty.
After all, I extend volume discounts to my best clients and would expect all vendors to do the same. It’s a sound capitalist principle, in my view. So there are inevitable inequities to the system that I understand and even support.
But there’s one major inequity that I find disturbing and would like to know how it evolved. Putting “Net 30 days” on an invoice has become almost as quaint as my Dad’s old 30-pound Borroughs adding machine. While I am expected to pay my credit card bill upon receipt, my largest clients — to a company – make no apology for a 55-60 day payment schedule. Some even proudly proclaim they pay within 55 days. And alas the all-too-frequent snafus can delay that schedule to 75 or even 90 days.
Now I know bureaucracy and the time it might take to receive, process and prioritize payables. But I also know that electronic transmissions have sliced the manual handling by days, if not weeks. In other words, that’s not a plausible excuse.
Nevertheless, while I struggle – and never more so than in the present economic climate — to pay all of our payables within 30 days, my large corporate clients continue to adhere to the arbitrary 55+ day schedule of payment. If I don’t meet the deadline, I hear about it instantly – usually from the Big Business vendors rather than the small ones. The Big Boys are also the one that are quick to tack on a late fee, at the very same time they are delinquent in their payments to us.
I contend that if these big boys decided – in the interest of national fiscal health – to issue payments to their small business vendors within the old-fashioned 30-day window, the economy would see an immediate improvement.
Aren’t we always hearing how small businesses are the backbone of our economy? Well let’s quit breaking the back of small business by forcing them to borrow money to meet their own obligations.