Cash is King

A Dollar is a Dollar, A Dime is a Dime.

For many people in work, the end of the month signals pay day. For the most part it is a regular occurrence, one many folk come to rely on. For better or for worse, it’s an essential ingredient to keep the ball of life rolling. Imagine the uproar if you regularly had to chase your employer for your wages? Money makes the world go around. Cash is King.

When you run your own business – one of the things you have to get used to, is that pay day…kinda vanishes. You have to get used to getting paid after the company gets paid, and quite right too. So prompt payment matters.

A couple of years ago, I had to wait over four months for a substantial invoice to be settled. The delay seemed designed into the process, despite both parties having previously agreed payment terms of 30 days. Fortunately we manage our business with care but too many delays like this spells trouble. Money makes the world go around. Cash is King

At What Goes Around we don’t have a policy, or terms of settlement for invoices we receive. We simply pay them as soon as possible after arrival, usually within 24 hours of receipt. From my experience, this is not uncommon among employee owned and smaller businesses. Money makes the world go around. Cash is King.

Lots of businesses talk a lot about Corporate Social Responsibility, and I think paying your bills promptly is a key part of being a responsible business. If your company delays payment to your suppliers, I wonder how that fits with your company values?

Author: Doug Shaw

Artist and Consultant. Embracing uncertainty, sketching myself into existence. Helping people do things differently, through an artistic lens.

11 thoughts on “Cash is King”

  1. Likewise I have always paid my bills immediately. It goes back to my mother who used to twitch the curtains when the gas bill was late and would sometimes phone them up to check if it did not arrive.

    Sadly, I think we are in a minority. Of late, I have had one or two examples of extremely sharp practice from people who should know better. The most graphic example of this was when I did a piece of contract work for Accountancy and HR Outsourcing company RSM Tenon, agreed at a price of £3000. At the end of the work I was told they had changed their mind and reset the budget to £2000. It turns out that the company lost £100M in 2012 and had solved this problem by getting an overdraft for £94 M. No wonder they don’t want to pay their bills!

    In my humble opinion, this is how we got into this mess and it seems, with some exceptions, that the bigger they are, the harder they fall.

    Rant over. Market leaders like Tescos ought to be leading by paying farmers within reasonable time periods etc.

  2. When I set up MPP in 2003 one of my commitments was that I would pay my bills by return which apart from £60 for stationery which got forgotten once (still feeling sheepish), I have stuck to. My experience is this:

    The longest I ever had to wait was 7 months from Barclays and even then the payment seemed only to come because I found someone who seemed to understand that I needed to get paid.
    The quickest I have ever been paid was from a tiny charity with monthly cash flow challenges who paid me on receipt on my invoice and in fact the charities with whom I work continue to pay me immediately on invoice.

    The rules and moralities get distorted the bigger the numbers. People (including me in the past I’m certain) working in large corporations see and experience money differently, it’s not about me and you, it’s about them and the others. And as Peter says, that’s what has got us into this mess.

  3. Thanks Peter and Meg, some very interesting common threads in your comments thanks. It seems smaller businesses – where I guess people are closer to the cash, pay quicker than bigger businesses? Cash is important to all – it is interesting how as Meg says, the experience of money is felt differently in a larger business.

    Meg – the example of ultra slow payment I experienced involved a charity, albeit a large one.

    Based on our shared experiences so far – it really does seem to be the bigger they are – the more distant from reality becomes the situation. It would be wonderful to see some big businesses recognising that part of being socially responsible is releasing cash when due in a timely fashion. A company that offered and maintained that commitment could really stand out eh.

  4. One of the things I really like about my current company is that they are sticklers on paying invoices to term – if it’s 30 days, they pay on day 30 at the latest. They also particularly prioritise local small businesses. I think it comes from their roots as a very small hand-to-mouth company, where every order was cash up front.
    It makes a refreshing change from the previous company I was at who had a “policy” that they only paid after they had been chased twice – by the vendor – for the money. No matter that I had grads whose essential membership of an organisation to develop them were waiting for this to be paid, I couldn’t hurry things along because I wasn’t the vendor. *headdesk* This was an organisation with strong links to the building industry (and all the cashflow issues that entails) but it seemed to directly go against the first of their published “values” of ‘trust’…

    1. Hi Lydia – you have encapsulated the best and worst of the issue beautifully in your comment.

      May your company gain more success from its continuing recognition of the importance of keeping the flow going.

  5. Now, Mr smug bastard trustafarian Cameron (moderate this as you wish Doug) but if you genuinely want to help small businesses make it illegal to not pay your bills on time – 30 days absolute maximum or the business (Tesco, BT et al) is declared insolvent and the person in charge of Finance (Group FD) etc automatically goes to prison. So we are less reliant on the crappy banks for finance AND we start to make people in big corporations properly responsible. Far better for business than the ridiculous new regs on dismissals. (Note we are still waiting for anyone to go to jail under the H&S regs though, or any banker – Eric Daniels? – to be prosecuted for fraud with the misselling of PPI).

    I pay all invoices on time – usually on receipt. Certainly my clients can afford to pay on time.

    1. Moderate you Julia? You must be fucking joking! I think this is less about Cameron – more about a succession of politicians from all parties who do nothing substantive to help. I loooooove your suggestion. Thanks – Doug.

  6. Well said everyone, this is a big issue and one the government should be addressing. The thing that annoys me the most is when I jump through hoops to follow a company’s accounts / procurement processes and then still get paid late. It happens a lot even with companies I’ve been working with regularly with for years.
    I also had an example the other day of a company actually writing to me to tell me I was being moved from 30 day payment terms to 60 days because they needed the cashflow to expand into new markets. I’m a self employed consultant and they are a FTSE 100 multinational currently reporting record profits. Obviously stupid of me to think that I needed my cash more than they did……….

    1. Hi Matt – good to hear from you. I’m going to send this post and the comments to my local MP and the Secretary of State for Business to ask for help. I’ll keep you posted.

      Your stories make me angry and sadly reinforce practice that is all too common. I fail to see how any business that willfully delays payment to suppliers (regardless of their size) can even hint about talking about being a socially responsible company.

  7. Excellent post Doug. I hope you can back me up here when I say that from the client side, it is one of my principles to ensure that small businesses that I do business with are paid promptly. I always go out of my way to ensure that happens. I know it is of critical importance to them. And it’s the least I should do – the partnerships I make are long term and I take them with me from one role to the next and value them highly.

    1. Lovely stuff Flora – you have no need for hope in this instance though, for all you have done is tell people precisely what you do – and I value that as highly as I know you do.

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