Tuesday, January 06, 2009

Pay up

I return today to one of the most frustrating things about being self employed.

To me - and the millions of other sole traders in the UK - cash flow is crucial.

We do not have massive backroom teams to deal with stuff - We ARE the backroom.

We do not have various ‘departments’ to do their thing before anything happens - We ARE those departments.

When I get an invoice I always pay it promptly.

Time and again in the 4 plus years I have been self-employed I invariably have to ‘chase’ payments of my outstanding invoices.

I am usually told things like – “it is in the system” or “it has been passed for payment.”

Many times I’ve had to chase payments 2 or 3 times. I often feel embarrassed about asking. And yet it is my money!

The longest I've had to wait for payment is just over 9 weeks from the date of my invoice.

I used to work as a manager in the National Health Service (NHS) and so I realise big organisations ‘pass’ an invoice from ‘desk to desk’ and ‘manager to manager’ for approval before it eventually reaches the person in the finance team who finally sends the money to the supplier.

As a manager in the NHS I often commissioned suppliers who were sole traders or small businesses. I appreciated how important it was for them to receive their money for work done. I therefore took personal responsibility as a manager to ensure their invoices went through the system as quickly as possible. I've always contended this is possible but relies totally on the individual manager taking a personal interest and showing loyalty to the person he/she commissioned in the first place to perform the work!

I was not a perfect manager in the NHS but, come on, this is not rocket science.


Smaller organisations I work for are always the quickest payers. Maybe that is because there is empathy about the importance of cash flow.

Four years have passed since I started charging for my services and as far as I can see things are not getting better but I live in hope.


12 comments:

Scott said...

Agreed...2 things

www.iousa.com or Google it.

www.droppingalmonds.com

I have found, much as you, that many people are starring in their own movie. We just happen to be casted as characters. We are really here to serve the masters that continue to serve themselves.

In a lawsuit within the last year, I had an judge tell me verbatim, "I believe laws were easier to enforce when people relied on a handshake or six shooter." He said that right before he dismissed the case, and even though he didn't find guilt in the defense, he made the defense pay damages because of how they conducted their business.

My how things have changed...

Trevor Gay said...

Hi Scott and a Happy New Year to you and your family from Annie and I.

I did buy a copy of Dropping Almonds just before Christmas but have not read it yet – I look forward to reading it.

On payments it seems to me that I’m in a constant dilemma. If I turn down work because of bad payments history then I am cutting of my livelihood to some degree so I am between a rock and a hard place. What irritates me most is that it is so easy to arrange payment of invoices but no one in big organisations seems to take responsibility.

I love your quote from the judge – he seems a man of my own heart.

iousa looks fascinating – it’s pretty clear to anyone with an IQ above freezing point we have all been too greedy and now the chickens are coming home to roost. I remember when I got my first mortgage the best deal I could get was two and a half times my salary. Up until the bubble burst last year lenders were lending up to 6 times the salary for house purchase … no one regulated it and now we wonder why we are in deep trouble.

Scott said...

Trevor,

www.iousathemovie.com may be a better link. Anyway, there is a 30 minute video on the site that shows how grave the situation in the USA is.

You'll like Dropping Almonds, a 3-4hour read; rated PG-13 for language and adult situations. I look forward to your feedback.

Trevor Gay said...

Hi Scott – Wednesday evening 11.40 pm - I just watched the 30 minute programme. It paints a really black picture for the US. Three questions from this pretty na├»ve Brit about the financial problems in the US:

1 Interesting to see that one of the four deficits mentioned is leadership. Where/who do you see the leadership coming from to get the US out of this hole?

2 It clearly is a really serious situation – do you think the average person on the street in the US is aware of the seriousness of the situation?

3 What is your prediction of the impact of Mr Obama’s election as President?

Thanks so much for educating me Scott - I am no economist and the language used in this 30 minute film was relatively straightforward in explaining a complex problem.

Moving on to Dropping Almonds – I will certainly let you know what I think – the book is on my reading list – along with about 10 others at the moment! I hope I can find 4 hours in the next few weeks to read it!

Scott said...

Trevor,

Answer to #1
The US has allowed greed and corruption to free flow from politics to corporate America (Wall Street to Main Street in essence). There is very little trust in either system right now. The leadership must come from people, not the politicians. I believe the country will return to more "grass roots" values and turn its back on the government. Based on the video, the government will go bankrupt trying to save itself, not the people. Huge dynamic shift will take place in the US and trickle to other countries; essentially redefining values worldwide. We may be at the end of greed and corruption because there is essentially nothing left to take from the taxpayer.

#2
I don't believe the average American is aware of how grave the situation is right now. There are thousands of layoffs happening per day and many people are more worried about the short term. I have several friends that: have lost houses, both spouses are out of work, and have been looking for employment for several months.

#3
Obama is very smart and pretty practical from what I can tell. He understands what he's up against and has outlined that issues will become worse before better (at what point they become better is a mystery). I very much worry about Obama's safety. The economy exacerbates issues and causes average people to do dumb things. I'm seeing more neighborhoods look run down and not well kept. Likely due to foreclosures and vacancies.

The premise of Dropping Almonds is that we, all countries, need honesty first and leadership running a close second. There is so much dishonesty and mistrust in the marketplace today that business principles, to some degree, have lost their significance. If you can't trust the people you're working with; i.e., payment issues, employment issues, equality issues, etc., and don't view business partners (politicians) as honest, the rest is elementary...it won't work in the long run.

I know that you're a big fan of Tom Peters, and to some degree I am to, but his business lessons and practices are somewhat dimished and less significant because workers need an "honest boss" first and foremost. If people aren't going to be honest with each other, and care about each other's well being, I don't care how crucial the conversation needs to be...it isn't going to matter. If we aren't participating on a level playing field, the "man" is going to win regardless of lessons or intentions.

A lion's share of the population, in my opinion, does not trust the government or corporations. Horrendous problems and management have led to our current day issues. The people must take some, if not much, of their destinies in their own hands.

J.KANNAN said...

It’s ideal and good to “PAY UP” one on time rather than being forced to “LOOK DOWN”

The points you have brought out on realization of invoiced money to the self employed, sole traders, small traders etc causes frustration and disturbance to many individual in business in the present scenario is a true situation and calls for immediate solution for rectification and I find the only way through ethical and good conduct of business by all in business.

Trevor, you are so ethical and good in honoring the invoices you receive from your vendors promptly, where as the fact is, as you have rightly indicated “It’s in the system” or has been “passed for payment” etc.. The latter one is some what a temporary relief & consolation towards hope and will maintain the status in records for an unknown period.-The easiest thing for an unethical business man is “unethical behavior and conduct” easily available with out paying for it- a self generated one within himself!!!!.

Ever since I became a self-employed person way back in 1989, I too was put into same situation and at times worst than what you have faced. In fact in my case, in more than a dozen occasions or may be more I had to approach the Court of Justice for redressal of my grievances against some of my debtors for non-payment of my invoice amounts and the justice was always delayed to match with saying “Justice delayed is justice denied”-How ever I had made good all my monies by adopting alternative ideas/methods ignoring the norms of the denied Courts of Justice.

After experiencing all these kinds of problems and turmoil, I have suggested to
my industry association a” Fool Proof” system to bring into effect of invoicing through banks, which needs Prime Banks approval, and is yet sleeping with snore for the past over three decades- That’s my country’s financial governance and administration towards business sector community. If only the suggestion made was implemented a large number of business sector people would have had a prosperous business and peaceful sleep at the end of the day- Make the Banks responsible for payments and government of the countries to introduce such systems in place by way of Rules. Laws and Regulations and by channeling commercial ,business and trading transactions without any loop hole to deceive any body, the banks being responsible for disbursement of invoice dues to the vendors without harming and hurting any body’s legitimate business Rights?. There were other options offered to the trade and industry to suit best to their industry and thereby protect the rights of every one and I don’t intend to go very deep into all those things.

Trevor never feel embarrassed to ask for your money, for one reason, that if the guy at the other end once smells that you are embarrassed to ask for money, he will certainly take you for a ride, instead apply all subtle and sober approach to get your invoice money and when your simple and humble approach fails, get on to their heads and get your money-Don’t let others to “TASTE HONEY OUT OF YOUR MONEY” and the right policy I would expect people in business to follow is “ Once bitten twice shy”- Of course once you had the bitter experience with a person/firm/org/co etc. avoid and eliminate them from future business transactions- Yes in my business it has helped in many occasions to remain in” peace “ instead of in “pieces.”

All these kind of incidents happens why? Prima-facie due to lack of” Business Ethics” and good practice by people in business. “Do not allow your customers to run their affairs with your money. and it’s a very simple concept- If one does not have enough monitory strength and to adopt good Business Ethics & practice, do not involve in business instead find alternative options like salaried job. Pay every body on dot as per agreed terms/understanding and receive also in the similar pattern, then watch how every ones business grows and flourishes. And always remember the fact in business “Credit Kills Love” Please do not for God’s sake kill Love.’ And to refrain from killing love all need to be ethical and good in business practice and conduct

My suggestion would be to change oneself to the circumstances, for good, if the circumstances are not congenial and conducive for ethical conduct of business.

Good “Business Ethics & practice is one of the finer qualities of a true Leader, and this can avoid “PAY UP” PROBLEMS TO A GREAT EXTEND.”.

Let me conclude this with one of the finest sayings by Mr. John Quincy Adams, the 6th President of United States of America. 18 decades ago-

It means Good Leadership did exist in good old days.

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

“Learn to “Pay-Up” and “not to look down”

J.K

Trevor Gay said...

Hi Scott - and thanks for some brilliant responses. What shame that your society – (and ours in the UK) has lost trust in our leaders. It is tragic when people are losing their houses –I’m sorry to hear about your friends in that scenario. I am sure we are going to experience precisely the same thing here in the UK – it has already started in fact. I am hopeful Mr Obama will provide leadership example to the world as the most powerful man in the world – we need inspiration from someone! I pray he will be kept safe though I can see why you worry about his safety.

I completely endorse Dropping Almonds call for honesty and leadership – we are crying out to be led through integrity and in an ethical framework.

I am indeed a fan of Tom but I can see what you mean – Tom’s messages only work with management and leadership that are underpinned with integrity –sadly too many businesses now see the ONLY objective as money and profit.

I am with you 100% Scott – give the power to the people - actually we already have the power of course!

Trevor Gay said...

Thanks again for your wisdom JK. I get really fed up when inefficiency persists – I have lost track of the number of occasions I have been told the payment has been made and yet nothing arrives until I chase it again. Someone is not taking responsibility for ensuring payments actually happens. For me we are not talking a bout mega amounts in the grand scheme of tings but all the small business added together means we are talking millions of pounds and that is just not good enough.

Dick Field said...

On the subject of the state of the US (and world) economy (forgive the off-topic continuation), I have always maintained something to the effect, "Real change only occurs when there is sufficient pain preceding it". I'm sure this is not particularly original (and may have originated with a great thinker!), but it has always been a mainstay of my philosophy regarding change. My take on the state of affairs in the US is that we are on the cusp of this. The early signs are appearing but do not compare to what is to come. In the last 24 hour news cycle, I am seeing the shift from "Oh, things will begin to recover in the second half of 2009" to "No, this thing is much deeper and will last to 2010 . . . or maybe longer".

My sense of the sweep of history (sorry, I had a grandiose attack), is that the finer values, like honesty, will be forced to the forefront of human behavior, because that will be the only capital at our disposal. Materialism and the disease of consumption will fall of its own weight. There, you heard it here, folks! :>)

-- Dick

Trevor Gay said...

Happy New Year Dick

Thanks for that exclusive breaking news from the ‘Dick Field newsroom’– I agree with you 100%. I love how you put it by the way;

“the finer values, like honesty, will be forced to the forefront of human behavior, because that will be the only capital at our disposal.”

That is beautiful Sir and I could not possibly have put it better- the same applies in the UK I feel

I expect your fellow US citizen Scott will be in agreement with you Dick.

Anonymous said...

I've been self-employed for 15 years as a consultant in the health / human services sector in Australia. I've not had 1c of bad debt in all that time and I've also encountered Trevors amongst my clients: people who recognise that cashflow is important for me and will expedite payment. The difference here, of course, is that nearly all of my clients are NON COMMERCIALLY oriented: that is, they have budgetted the $$$ for my project and it's sitting there. They themselves don't operate on razor thin cashflows, nor is there any advantage to them in withholding funds. My average turnaround for invoices is about 2 weeks. The longest was 2 months (plenty of apologies) and the quickest was payment before I'd issued the invoice . . . hehe.

All the best out there in self-employment land . . .

Andrew
Workwell Consulting

Trevor Gay said...

Thanks for that Andrew and thanks for visiting Simplicity Blog - hope we see you again!

I am very impressed generally by the payment turn around by voluntary organisations and small companies - it’s the biggies that really get under my skin. No one takes personal responsibility for payment of bills. For my regular clients my strategy is to find someone who pays the bills and latch on to that person - they can usually expedite payment. Another example of front line workers understanding customers far better than senior management.

Best wishes

Trevor