It seems obvious that you should pay suppliers, vendors and freelancers, and yet...here I am with another cautionary tale. If you're slow to pay your partners, you're not just creating a financial burden for them. You're creating problems for your firm, too.
Every company can have a hiccup in their accounts payable system. Or an invoice can get lost. Or whatever. The point is how you handle it.
Last week, after a year of trying including a formal demand payment letter and the threat of legal action, we finally received payment in full from a delinquent client. This is a national brand we've collaborated with successfully for eight years. At every turn we were assured the payment issue had nothing to do with the quality of our work.
3 problems you create when you don't pay your partners
Problem 1: Non-payment impacts your team.
We estimate we spent about 40 hours trying to get paid, most of those mine. That's a full week I wasn't working on anything else. Every month, my business manager and I had to review the past due amount and I had to decide if we would keep providing services. I had to reach back out with an inquiry that included an updated past-due customer report to ensure we were on the same page. Every time I did that, the company's marketing team had to try to find out what was going on. That lost productivity on both ends. Down the line, we also got the CMO and the accounting team in the loop, amplifying the productivity suck. When we ended our partnership, their team had to fill the gap.
Problem 2: Subterfuge erodes trust and loyalty.
At first, we were told the nonpayment was simply because they had replatformed their accounting system and were working through the backlog. We believed it. After all, we'd been collaborating for almost a decade so accepted new projects while we waited for payment. We got some small payments, but then things dried up again. This time, nobody could tell us what the hold up was on thousands of dollars still past due. It started to feel like they were just stringing us along. The chorus of "I don't know what the hold up is" from our client to the CMO felt rehearsed and dishonest. When we could get a response at all. There are so many emails, vmails and texts we know were delivered but not replied to.
Problem 3: You put your reputation at risk.
When anyone asks me about working with the company, I tell them what happened to us so they understand it could happen to them. I used to amplify their open positions on LinkedIn and refer candidates -- now I don't because of how they treated me and how they hung our marketing colleagues out to dry. I don't want other people to experience that kind of disrespect and disregard.
