I work in a VERY casual construction management office. It includes the owner, his daughter, and me. The daughter of the owner and I are concerned with the image that the owner is representing to our customers and vendors. Whenever we need to get paid or are being asked for money from our vendors, the owner starts telling them how broke we are, how much money he didn’t make last year, his credit card got cut off, anything. It works sometimes to expedite a payment from a customer or hold off vendors for a while, but we feel like eventually our customers and vendors will not want to work with someone who is constantly out of money. How can we tell him that this is inappropriate? What else could he say? (If it helps to clarify, in the construction industry, our contracts state that we do not get paid until the general contractor gets paid, who has to wait until the owner of the property pays them. Our vendors follow a strict net thirty-day schedule. So, even if we haven’t been paid for the work we’ve completed, we’re expected to pay for the materials and labor).
M. M., Richmond, VA
Something seems unusual here. The general contractors I’ve talked to about this situation indicate that when they subcontract work to a firm like yours, they are on the hook to pay you in a specified time regardless of whether they are paid by the client or not, just as your company is responsible to pay any suppliers or sub-contractors you engage on their net thirty-day terms. They also indicate that companies should have the financial wherewithal to cover paying a vendor. That can involve keeping cash reserves or a line of credit. As the client, I’ve paid general contractors at regular intervals through the job so the general contractor could make timely payments to his subs.
The etiquette part of the question involves the tactics your boss is using to delay payment or to induce payment. I fear you are right, and the general contractors I’ve talked to say you are right. If he plays this “poor” card repeatedly, vendors will tire of constantly being put off. Once in a while is one thing, but repeatedly complaining and delaying will become a problem. Nobody wants to do business with a whiner.
It’s time for you and his daughter to talk with him. The conversation has to be conducted in a calm manner and be focused on the concern you have for the welfare of the business. Start the conversation by explaining that you have the best interests of the business in mind. Then bring up your concern that if he continues to present an image of being cash-strapped, your business may be hurt both by vendors who don’t want to do business with him and by general contractors who won’t want to hire him. Be ready to examine what is necessary for the business to meet payments to vendors and what is reasonable to expect in terms of payments from general contractors. Good luck.