Everything, that is, except payment. For some reason, when it comes to handling invoices, computer systems with 2600 MHz processor speeds suddenly slow to the pace of an elderly snail in a glue factory. The consequences are equally inevitable: supply lines get stretched, tempers get frayed, some suppliers go bust – and corners get cut in a desperate bid to make the sums add up. And for what? The tiny fraction of a percentage point that a company can squeeze out of the job by holding onto the money a tiny bit longer? You've only got to look at the interest rates to realise that that idea doesn't hold water.
No, the truth is that the policy of slow payment is another throwback to the bad old days of confrontation that still dog our industry. We've got into the habit of being bad payers. In fact, we've got so far into the habit that we don't even see the absurdity of concepts like the prompt payment discount. You know the kind of thing: "Discount of 5% if account settled within 20 days" (translation: "95% is the real price of the job, but I need to give you an incentive to pay it on time").
Now, regular readers of this column will know I don't like to grumble (thanks for the letters, by the way – I believe the correct spelling is "whingeing" subbie), but surely there has to be a better way?
As it happens, there is.
When it comes to invoices, computers slow to the pace of an elderly snail in a glue factory
We sat down recently with one of our bigger clients and, as part of a general process of improving the way our partnership works, developed a system that makes much more sense for both of us. The crux of it is relating payment directly to work completed: on larger projects, we invoice on a fortnightly basis for material that's been supplied, installed and approved, and the client settles the invoice by return.
Now, you may think this arrangement has obvious advantages for us – and you'd be right. It guarantees us a predictable cash flow and the ability to pay our men on site (who, unsurprisingly, aren't keen to wait 60 days for their weekly pay packet). We also don't have to carry the debt for goods we had to buy on day one right through to the completion (which can often be months later).
However, there's an equally big advantage for our clients. They're only paying for work that's completed and approved, so it's a powerful way for them to control a project's progress. It also means the whole operation can be leaner and more effective. This is particularly true of the material that's used in the project. I'm constantly horrified to see the amount of stuff that sits around on building sites (sometimes for months at a time) waiting its turn to be used. The reason it's there (and, as often as not, getting damaged, nicked or waterlogged) is because it was brought on site months too early just so the invoice could be sent in and offset against later project costs.
With fortnightly payment, this doesn't happen – so there'd be no incentive to bring the material on site until it's ready to be installed. That's good for everybody (including the maker, who doesn't find his own credit terms being squeezed by the installer to keep the wolves at bay).
Luke Wessely is managing director of Allan Roofing.