Transcript
My name is John McDade. I’m the CEO and founder of Site Expedite, LLC, also known as Site X.
Our company as a primary function performs telecommunications infrastructure builds. So we build towers, we do underground plant, we do radio systems and uh, public safety networks.
Dealing with late payments
When working with large corporate organizations in the US we have experienced significant delays on payments. Common starting payment terms for organizations is net 90, which means you’re typically getting paid in net 100 or net 120 days.
So it’s very difficult to carry that much capital and to get through those long payment periods. And even once you get everything submitted and approved, sometimes there’s difficult to getting invoices paid.
It has significant impact on our organization because some of the larger projects, we would be unable to actually execute those projects if we had to carry the burden of the 90 or 120, uh, day payment terms. So their capital intensive projects, for example, we just did a large network upgrade in, in the southern United States, and the out-of-pocket cost for the materials alone was approaching $300,000. That’s before we, before we even started construction, we have to make payroll, we have other operational expenses. So even if we don’t get paid on time, we still have to figure out a way to pay those bills and keep the organization going forward.
So the financial impact in terms of um, erosion profit can be significant much as 10 to 20% on, on the tail end of a project. So it’s very painful.
How have accelerated payments impacted your business?
So it’s literally just submit it, wait for the payment to hit the bank. There is no follow up. We’ve never had to escalate an invoice payment as long as it’s been approved by Motorola. So it’s, um, very, very easy to, uh, to operate well. I believe all large, large corporations should offer an early payment plan for, for qualified vendors.
Why should corporates offer accelerated payments?
I think by not offering one, they eliminate a very, um, a very high quality pool of smaller contractors that just would not be able to engage their projects.
It’s beneficial for both sides, the large organization as well as the small contractors.
