Edition 260 – Corporate Chaos

It’s early in the New Year and already, a number of my family business clients are pointing out the stupidity they’re having to deal with from their large corporates clients.

One client mentioned to me last week that a large corporate (we’re talking publicly listed company) that they’re looking to do work for is so disorganised that they’re demanding work be done, by my client, without issuing a purchase order. The works that are needed to be undertaken are somewhat urgent and the client is wanting a reasonable sized project to be complete within a week. Yet, this $2 billion plus turnover company has such rubbish internal systems, or is so completely disorganised, that they can’t remove their digit sufficiently to press “GO” on sending a purchase order.

For my client, they don’t start without a purchase order – the wisest of decisions. Too often, in the large corporate world, unless you follow their systems and someone from their end takes ownership of issuing an order, all the emails, phone calls and pleading in the world will amount to nothing as you don’t have the written authority to proceed. Without authority, there is never payment.

A second client recently experienced a situation where a not insignificant portion of a tender had completely overlooked a key task. This only came about when my client, a family business, was on site and identified additional works that needed to be undertaken. When they posited the question to their corporate client, the response on the other end of the phone was deafening silence. When my client then suggested that if they wanted the additional works undertaken, they’d need written authority from their client to proceed, it was panic stations as the cost of the error quickly became apparent. Clearly, someone had not been thinking the day they put the tender documents together.

Large corporates really need to pull their socks up and get their act together. Better still, they need to stop and take a lesson out of the family business instruction manual. Without it, there is significant lost opportunity for these companies and a loss of economic progress for Australia, if they don’t start planning ahead AND don’t start getting their systems ordered. Here’s where they can start:

Do something right the first time – otherwise it costs you money, reputation and potentially your livelihood.

Think like the money is coming out of your own bank account – not an endless money pit.

Be realistic – if you are giving a supplier a week’s notice to start a job, are you giving them enough notice to source materials and labour.

Get your paperwork in order – and better still, follow your own systems.

Be faster at paying – there are still too many large corporates that are dragging their feet and I’ve recently seen some invoices with 200 days outstanding!

Own it! Don’t shuffle the issue to someone else – actually handle the problem.

Family businesses don’t have infinite resources at their disposal. They’re incredibly efficient at what they do and can often make a dollar stretch further than most other businesses, without sacrificing the quality or the efficacy of what they’re doing. Yet, one of the biggest risks they face is undertaking work with larger corporates which often, but not always, impose unreasonable deadlines, unfair payment terms and unworkable terms and conditions on them. There is a lot that large corporates can learn from their small and family business colleagues which could significantly improve revenues, profitability, business value and enterprise longevity.

If you’re dealing with a large corporate client, stand your ground when it comes to enforcing systems and procedures, both their’s and your’s. It shows you know your stuff and are not prepared to risk your business for the sake of their tardiness.