Receiving Timely Payments
My experience some years ago with a vendor well known to this list
was that our A-P department took the view that a "net 30" contract
meant they should pay 30 days after receipt of the invoice, and not
a day earlier. The vendor took the view that they would send out
the new licence key upon receipt of payment. Needless to say, this
almost always meant that we had to request emergency keys to tide us over.
Now as an ISV employee, I see many Fortune 500 companies that have
A-P departments who, as a matter of policy, push the limits much
further, and more often.
At Cole Software, our own experience is that once a Purchase Order
has been cut and an Invoice accepted, by far the majority of our
customers pay within 30 days. Occasionally, it might take 40 days,
but it doesn't matter. As far as I'm concerned, that's close enough.
As a person with a programming background, I didn't know much about
account payment procedures. I used to think, hey I send the invoice,
I get payment. Simple, right? Wrong!
Most accounting departments won't even accept an invoice unless they
already have a Purchase Order to match it up to. And to get an
accounting department to generate a purchase order, you've got to get
another department (our actual customer, the programming department)
to generate a Request for Purchase Order (RPO). And all this takes
time and for some companies a lot of hand holding on our part.
The trick is to get the RPO-PO-invoice freight train rolling early
enough so that the A-P Department will accept our invoice early
enough that we can get paid reasonably close to the lease expiration
date. This is where our Accounts Receivables department plays an
important role. At this small company, I am bless to have working for
me Kaye Crabill, a person who has had extensive experience with
corporate accounting and who has taught our A-R people the ins and
outs with dealing with A-P departments. It takes a lot of hand
holding on our part, but the benefit is that we almost always receive
our payments within 30 (sometimes 40) days.
About Licensing Keys Coercion
Possibly the only way to bring these A-P departments into line is to
have a notice in the invoice that says failure to pay promptly means
that the product will stop working. Frankly too many governments
and companies are playing games that penalize the honest vendor and
cause prices to rise for those who honor the terms of the agreement.
I think a decoupling of the keys issue and the payments is called
for, and indeed in the real world this happens much of the time.
Emergency keys and the aggravation they cause may be the only way to
get some bureaucracies to move. Unfrotunately this puts the sysprog
in the middle of a fight.
I strongly believe that the withholding of licensing keys should
never be used as a negotiating tactic in any situation. In fact, our
standard software lease agreement contains the following language
regarding this subject. Note particularly the last sentence:
License Control Data: Customer understands and agrees
that activation of the Products is controlled by License
Control Data that must, from time to time, be applied to
the Products. License Control Data is designed to
control both the computers on which the Products will
function and the time periods within which the Products
will function. (This control provides both asset
protection for Cole and liability protection for both
Cole and Customer.) The furnishing of License Control
Data to Customer does not, in and of itself, establish
the right of Customer to use the Products. During the
term of this Agreement and any extension thereof, Cole
shall furnish License Control Data to Customer as needed
for the uninterrupted use of the Products by Customer on
the Designated Computer at the Designated Site. Cole
shall not withhold License Control Data from Customer
for any reason other than termination of this Agreement.
But when push comes to shove ...
While most customers are perfectly reasonable once you understand and
cooperate with their procedures, there is the occasional outlier. And
one of those outliers in recent years has, sadly, been one of the
largest software companies in this industry (not IBM). On the last go
around, they pushed us out to 90 days plus! [Side note: I've noticed
over the years a strong correlation in major companies of slow pay
with financial difficulties. I guess that's a DUH!]
So while I am unwilling to withhold licensing keys as a negotiating
tactic, I nevertheless am willing to withhold long lasting keys...
But with this particular company, that was not enough. The sysprog's
pain of having to apply weekly keys (following our already built in
30 day grace period), and the IT department's pain of receiving nag
messages every time they used z/XDC, was not sufficient to give the
A-P department any pain whatsoever.
Well, the loophole in my contract's language is, of course, that I
can withhold keys when the contract terminates. And nonpayment is, of
course, grounds for termination. It actually took a notice of
termination to finally get payment! A drastic measure, but at ninety
days out, it was definitely time to get drastic!
Dave Cole REPLY TO: [EMAIL PROTECTED]
Cole Software WEB PAGE: http://www.colesoft.com
736 Fox Hollow Road VOICE: 540-456-8536
Afton, VA 22920 FAX: 540-456-6658
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