What is your experience in dealing with a large company's pay schedule? How does it affect your business's cash flow?

It's okay to stop shipping, or providing services to them if they don't honor their agreements. This works. I have done it for years.

Also, for years I refused to buy GECC Commercial Papaer because of their tendency to push around the companies I worked for. Don't let the big guys intimidate you and they won't.

Thanks Ray. What course of action is appropriate if the big company(s) is vital to your business? I.E., supplying ABC Company accounts for 20% of your revenue. They pay much later than their terms state. If pushed back, there's a significant risk that they go find someone else to supply them at a comparable price. Thoughts? Ideas?

They don't like being treated unfairly either. If you play to their sense of fairness, they'll come around. I don't mean to be either casual, or cavalier, but you need to be firm with them and they'll respect you. They do business with you for a reason; you do something better than your competitors.

Someone in the back office should be the hard-ass. hat way a sales, or marketing type can be the white knight.

Specify in engagement letter/contract payment terms and consequences of late payment. Stipulate regular payment schedule and require advance payments at beginning of work. Provide that payments not made within X days of billing bear interest from date of invoice plus incur all costs of collection, including attorneys fees and staff time at professional billing rates.

Further, state payments to be made by wire, which accelerates timing, avoids delays in banks' processing funds, and reduces suppliers' internal admin/acctg costs.

Another approach is to build in costs of providing financing to the company, because late payment practices essentially are financing accommodations, into pricing. If company objects, then offer favored pricing for meeting payment schedule.

if you're small enough, talk to the controller and (essentially) beg. offering meekness at a level of some power will often help find humane treatment resulting in being treated as an exception. if you're medium-sized, probably won't work.

Unfortunately in dealing with large businesses, especially marquee brands, sometimes you just have to plan for delayed payments. I have worked with several small businesses (less than $25 million) that provided services to entertainment companies. The prestige of working with these companies opened doors for other contracts - and the companies knew it; so you got paid when they decided to pay you. About the only way around it was to ask for deposits. Often they are willing to put up an advance for materials if it is for a specialized job.

Make sure you understand their company policy for making payments. Do they pay in 30 days or 60 days? You can specify on your agreement net 30 days, but if their policy is to pay in 60 days, that's what you'll get. Make contact with someone in the Accounts Payable department and make sure you submit your invoice with all the correct information necessary for an easy process. Once you have a contact in Accounts Payable, you can also follow up and just make sure there isn't anything else that may be holding up the payment. Finally, add the anticipated receipt of funds in the column of your cash flow projection with a realistic date so you make sure you have enough cash reserves to cover you until this payment is received.