Paying Bills

Today an incident happened that reminded me of the times when I used to work for a Dutch IT company that will remain nameless. Apparently there were some overdue bills and the vendor was kind enough to let us know the date of expected payment or face delayed services. My boss wanted me to devise something that will signal when our outstanding bills were growing out-of-bounds to head off any future problems.

This request was such a contrast with the Dutch firm. Our firm was bought out by a Dutch company which then proceeded to replace the existing managers with new American managers. These new managers then installed a new way of doing business:

* Stop paying vendors until 90 days has passed; in some cases, don’t even pay at all;

* Stop making capital infrastructure investments;

* Halt all merit increases for a number of years and deny bonus payments, even if our customers offer to reimburse us for the bonuses.

You can imagine what happened. Those merit increases? Well, apparently employees knew that managers had a bonus pool that they paid themselves for meeting the cost saving goals. As a matter of fact, in order to maintain the size of the bonus pool and not increase it, upper management had to kick out some folks who were receiving those bonuses. Guess what? Those employees blabbed. Talk about employee disengagement.

Capital infrastructure? We lost at least one customer who told us they had concerns about our lack of investment in the computer infrastructure.

And of course, the vendors learned very quickly to start demanding payment upfront before delivering any services. This meant that if we wanted to implement a new service for a client, we had to pay upfront and sometimes the price was too hefty and thus we could not create new business.

About 6 to 9 months after I left the company, the company lost 2 major clients, which, I imagine, sent the company into a tailspin. And a year or so later, the company sold the American part of the business to a competitor; thus ending its American venture. What a destructive reign.

So I’m very glad my boss and the owner wants to pay the vendor rather than play financial games. Because that’s what those American managers did at the Dutch company.