6 ms·

Well, I AM talking about the real world (note my post scriptum). Also, when you talk about small consultancies and Fortune 500 companies: I have worked for a sm

by binarray2000 15y ago

Well, I AM talking about the real world (note my post scriptum). Also, when you talk about small consultancies and Fortune 500 companies: I have worked for a small consultancy and, later, as a freelancer for German top companies (Deutsche Telekom, Deutsche Post, Munich Re - to name a few) and they all have paid, both that consultancy and me, within a month of which the consultancy/I have sent the invoice. USA is, judging from your comment, different... I see that now. Aside from being (in my opinion) a bad business practice, it's also lying to the shareholders. You see, that $80 Billion figure would be smaller if they'd pay the manufacturers in a reasonable timeframe.

JonWood 15y ago
Having worked as a solo freelancer in the UK my experience was that prompt payment is inversely proportional to the size of the company. The single man startups I worked for would pay their invoices promptly, while multi-nationals seemed to consider "net 30" to mean they shouldn't even consider paying until 30 days after receipt, and seemed to have a policy that they wouldn't pay until hassled.
- tptacek 15y ago
  We pay pretty much instantaneously too. There's a couple reasons why we're "good" at paying and F500s are "bad" at it (although in MBA terms, we're the ones who suck): * We don't have a payments/procurements department, so "payment" usually means me, Dave, or our finance person just cutting a check. * We derive no meaningful benefit from withholding payment (pennies of interest, versus hundreds of dollars of lost cycles). At giant companies, carefully managing payables probably makes an enormous difference. When you say "operations excellence", stuff like how vendors are paid is one of the first things many people think of.
- christoph 15y ago
  Tell me about it... sometimes I'm lucky to even have a PO (purchase order) number to put on the invoice, 30 days after I've completed the work with large companies. The payments department won't even look at the invoice if it's missing that.
  - cbsmith 15y ago
    Rule number #1 in contracting: factor in the interest costs for N days interest in to your price. Your contracts should factor in an exorbitant penalty (based on time-value of money for YOU, not the market place) for post "net N" days (I'm a big fan of 10% + 1% per additional day). Great video on this: http://vimeo.com/22053820 http://vimeo.com/22053820
tptacek 15y ago
All I can tell you is that in the US, very long delays before invoices are paid out are absolutely the norm. I didn't jump in because I particularly care how Apple pays vendors, but because many people on HN are considering freelancing and bootstrapping, and they should know: big companies are never going to pay them on time. Keep cash in the bank. Your comment about Apple's balance sheet is pretty silly.
- binarray2000 15y ago
  Why it's silly? Apple has 90 days of non paid supplies on the books (and $80 billion in the bank - "cash and investments" as stated in the article). If they'd (OK... IDEALLY) pay all of them at once and continue paying supplies as they get delivered, only then would their balance sheet look realistic. Or, am I missing something?
  - AllenKids 15y ago
    Because under GAAP accounts payable (the money Apple owes its suppliers) is debt. Plain and simple.
    - comedian 15y ago
      Yeah this is very common and it's one of the reasons why Apple is so good at managing their cash. By delaying payments Apple can use the cash for other short-term investment opportunities. In Apple's case, their accounts payable is probably in the billions. As an example: If Apple has a $10 billion accounts payable and instead of paying it right away they waited for 3 months and invested that $10 billion on short-term securities with a 10% return, Apple would earn $1 billion in that 3-month period vs. ZERO if they paid their liabilities right away.
      - eli 15y ago
        There are short-term securities that earn 10% in 3 months? How do I get in on that?
tlholaday 15y ago
The shareholders are told exactly what is going on. Accounting: 1) Buy parts for $1000 debit Parts Inventory $1000 credit Liabilities - Accounts Payable $1000 2) Pay vendor debit Liabilities - Accounts Payable $1000 credit Cash $1000

JonWood 15y ago

Having worked as a solo freelancer in the UK my experience was that prompt payment is inversely proportional to the size of the company. The single man startups I worked for would pay their invoices promptly, while multi-nationals seemed to consider "net 30" to mean they shouldn't even consider paying until 30 days after receipt, and seemed to have a policy that they wouldn't pay until hassled.

tptacek 15y ago
We pay pretty much instantaneously too. There's a couple reasons why we're "good" at paying and F500s are "bad" at it (although in MBA terms, we're the ones who suck): * We don't have a payments/procurements department, so "payment" usually means me, Dave, or our finance person just cutting a check. * We derive no meaningful benefit from withholding payment (pennies of interest, versus hundreds of dollars of lost cycles). At giant companies, carefully managing payables probably makes an enormous difference. When you say "operations excellence", stuff like how vendors are paid is one of the first things many people think of.
christoph 15y ago
Tell me about it... sometimes I'm lucky to even have a PO (purchase order) number to put on the invoice, 30 days after I've completed the work with large companies. The payments department won't even look at the invoice if it's missing that.
- cbsmith 15y ago
  Rule number #1 in contracting: factor in the interest costs for N days interest in to your price. Your contracts should factor in an exorbitant penalty (based on time-value of money for YOU, not the market place) for post "net N" days (I'm a big fan of 10% + 1% per additional day). Great video on this: http://vimeo.com/22053820 http://vimeo.com/22053820

tptacek 15y ago

All I can tell you is that in the US, very long delays before invoices are paid out are absolutely the norm. I didn't jump in because I particularly care how Apple pays vendors, but because many people on HN are considering freelancing and bootstrapping, and they should know: big companies are never going to pay them on time. Keep cash in the bank. Your comment about Apple's balance sheet is pretty silly.

binarray2000 15y ago
Why it's silly? Apple has 90 days of non paid supplies on the books (and $80 billion in the bank - "cash and investments" as stated in the article). If they'd (OK... IDEALLY) pay all of them at once and continue paying supplies as they get delivered, only then would their balance sheet look realistic. Or, am I missing something?
- AllenKids 15y ago
  Because under GAAP accounts payable (the money Apple owes its suppliers) is debt. Plain and simple.
  - comedian 15y ago
    Yeah this is very common and it's one of the reasons why Apple is so good at managing their cash. By delaying payments Apple can use the cash for other short-term investment opportunities. In Apple's case, their accounts payable is probably in the billions. As an example: If Apple has a $10 billion accounts payable and instead of paying it right away they waited for 3 months and invested that $10 billion on short-term securities with a 10% return, Apple would earn $1 billion in that 3-month period vs. ZERO if they paid their liabilities right away.
    - eli 15y ago
      There are short-term securities that earn 10% in 3 months? How do I get in on that?

tlholaday 15y ago

The shareholders are told exactly what is going on. Accounting: 1) Buy parts for $1000 debit Parts Inventory $1000 credit Liabilities - Accounts Payable $1000 2) Pay vendor debit Liabilities - Accounts Payable $1000 credit Cash $1000