12:00 – I just issued our first-ever response to an RFQ for someone who intends to buy our kits via purchase order. We’ve never sold on credit before, but I’m tired of turning down business. The exposure on this one isn’t huge, 30 chemistry kits ($5,220 worth) to a state 4-year college that has 20,000+ students. So I decided to offer them 30-day terms. I’ll do the same for other public and private institutions that appear credit-worthy. In other words, I won’t sell on credit to, say, the bankrupt Detroit public school system, but I’ll happily sell on 30-day terms to, say, Penn State University or Cal Tech.
We’ve sold a lot of kits to public and private high schools, community colleges, four-year colleges and universities, and various local, state, and federal government agencies, but always either via credit card or on a pro-forma invoice and pre-paid by check. The problem with that is that it’s a major hassle for the would-be buyers, who simply want to get their purchasing departments to buy the stuff. Many of them simply can’t do it other than by purchase order, so we end up missing out on hundreds of kit sales.
I’m fully aware that we’ll probably end up writing off a few bad debts or submitting them to a collection agency, but as long as I use reasonable judgment I don’t think that’ll be a major problem. When we started this business we had no credit history, but our two major wholesalers automatically granted us credit lines of $1,000 to $2,000 without any kind of formal credit application. At this point, I could probably issue a purchase order to either of them for $5,000 without anyone blinking an eye. They know we pay quickly. So, I figure if they can trust us, we can trust public universities and similar organizations.
So I decided to offer them 30-day terms.
We sell our products and services to 100’s of Universities, Colleges, schools. Most require net30 on POs. My rough guess is they meet that 1 in 3. We’ve dealt with Penn State and Cal Tech on several occasions and they were 1 in 3 on payment.
The trick to get paid on time is to know the person who orders your stuff, not Accounts Payable. We’ve found that the “orderer” is your advocate and will walk your invoice to AP if need be.
We’ve run across some Uni’s that will only accept your invoice via mail. WTF. That’s when your advocate comes in handy. Email the invoice to them and they take it to AP no questions asked.
The worst clients are any school in WA. They must have gotten together and decided they will cut checks “once a month”. If they don’t punch pay Mr. Bob, you get to wait another month. We went through that with them on several occasions. PITA!
BTW, the best payer is the USPS. They even pay interest if they miss net30. Yay!
Here’s Lurch Kerry threatening Putin with “expensive” sanctions. The only thing we’ve got is a ton more oil and Lurch et al hate oil. He should tell Putin (comment in article) we’re going to drill and frack the shit out of oil to the point everyone will buy from us.
Thanks. That’s useful to know. I’m not really concerned about slow-payers as long as they don’t turn into no-payers.
I remember the good old days of 2% 10/Net 30. With interest rates near zero, I wonder if anyone bothers to do that any more. Certainly none of our PO vendors does; they’re all pure Net 30.
I wouldn’t even bother to try to charge interest on past-due accounts. From what I’ve heard, just about everyone (other than USPS) ignores the interest charge and just pays (eventually) the original invoice.
Welcome to Accounts Receivable management!
If you find a good collection agency, let us know. I have used a couple but I am not very pleased. My best solution has been to hire my lawyer dude, pay his retainer (which is wildly variable based on the type of litigation: $4,000 to $30,000), and sue them. Obviously, this only works in local courts. Outside of the Houston ten county region, this is a freaking disaster. My A/R is well into the middle five figures on international sales.
I wouldn’t even bother to try to charge interest on past-due accounts. From what I’ve heard, just about everyone (other than USPS) ignores the interest charge and just pays (eventually) the original invoice.
I have one of my customers, a Fortune 10 company, who does not process the invoice for six months. Then they process it over a two month period and “accept” into their A/P system. They then pay the invoice within ten days and give themselves a two percent discount for swift payment. That previous eight months did not really happen according to their A/P books.
Actually, oil isn’t the only thing we have. The entire world banking system fears the Fed. They’ll do exactly what the Fed tells them, and I mean that literally. If the Fed declares the entire Russian banking system persona non grata, no bank will do business with the Russian banks. For example, if the Fed tells the German banking system to freeze Russian assets, that’s exactly what they’ll do, no questions asked. Same thing with all other major central banks. Russia needs to turn over many billions of dollars worth of bonds this year. If they piss off the Fed, they’ll find they can’t sell their bonds and they’ll be forced into default.
The entire world banking system fears the Fed. They’ll do exactly what the Fed tells them, and I mean that literally.
True until they don’t. Some day the world will tell the Fed to take a hike. It certainly won’t be this year but it may happen in the next ten years unless we get our act together and stop the deficit spending. The Fed is now financing an unknown amount of USA tbills. Some four trillion dollars and change now. Growing rapidly, very rapidly.
It really doesn’t have anything to do with the deficit or debt. It has to do with clout.
I note that Russian sovereign benchmark 10-year bonds are now at more than 9%. Russia just floated a trial balloon, trying to sell some pathetic face value ($20 million, IIRC) and they were forced to withdraw the offer because there were zero bidders. None.
Russia has to refinance more than $700 billion of foreign-denominated debt this year, most of which is dollar-denominated, and they’re not going to be able to do it. And that’s not counting the $60 billion plus that Russian companies have to refinance this year. Russia is trying desperately right now to prop up the ruble, and they’re failing catastrophically. They’re also running themselves completely out of foreign currency reserves in this failed attempt. The ruble is nosediving and they can’t stop it.
So, their own money is rapidly becoming completely worthless and no one but no one is willing to lend them any money. Guess what that means.
The US economy is still the 900-pound gorilla, and that’s not going to change any time soon. China is spiraling down. They’re no longer even a second-class economy, and it’s getting worse all the time.
You know that old saying: if you owe the bank a hundred thousand dollars, you’re in trouble; if you owe the bank a hundred trillion dollars, they’re in trouble.
That means the rest of the world is in trouble, as long as they keep hoping to recover some of what the US government has borrowed.
How long can this situation go on, though? When do *we* default?
Because we’re clearly not gonna pay back what we borrowed. And neither will our kids or grandkids.
55 again today, with sun and blue skies. Lake is still at flood level and pier at the end of our little street (10 MPH, LOL) is totally submerged.
86 F here in the Land of Sugar and heading for 90 F on Monday. Right on schedule.
We need rain very, very badly. No rain since March. You can pull a 200 ft plume on my gravel roads if you are so inclined.
You know that old saying: if you owe the bank a hundred thousand dollars, you’re in trouble; if you owe the bank a hundred trillion dollars, they’re in trouble.
There is a third condition where you are the bank as is the Fed. Somehow, the USA Federal Reserve has become the World’s bank. Probably due to the trillions of dollars floating around the world as reserve currency (IMF loans). At some point, the villagers show up with pitchforks and torches and demand their gold. Bad things happen when they do not get their gold.
I did not know that about Russia’s debt. Luckily, Russia has stuff to sell to other people who are willing to pay hard Euros for it.
People can’t buy Russian products if non-Russian banks won’t deal with Russia, which is the current situation and will get worse as the Fed tightens the screws on Russia. What are people supposed to do, roll a wheelbarrow full of euros into Russia?
Much of the electric power in Europe (Germany) is made using Russian natural gas. Maybe as much as 20%. Mostly gas turbines providing peak power. These cannot burn coal (gasp!) and fuel oil (diesel) is very expensive. Power usage is dropping right now but summer is coming.
That is hard currency for the Russians as they will shut in the pipelines if they do not get paid. Somehow that money has to get back to mother Russia. In fact, this is why Russia is getting ready to invade the Ukraine so they can control those pipelines and stop the siphoning.
Europe has sufficient LNG to produce electric power until this autumn. Even if gas flow from Russia was completely cut off, it’ll take a while for Germany and others to notice. They’ve even re-engineered things to let the gas flow backward to Poland et al from the western EU. And they’re building LNG terminals on a crash-priority basis.
Would that be GE? GE Power Systems did that to me. This was the only contract where I dealt directly with GE. Every other one I went through a vendor, who paid me promptly on my invoices. Sure, they took a big slice of the action, but it was worth it for the saved aggravation.
I am under NDA so I can neither deny nor confirm that. The same customer even made me sign a 40 page ethics document that did not control their ethics. But, they do bring good things to life.
Europe has sufficient LNG to produce electric power until this autumn. Even if gas flow from Russia was completely cut off, it’ll take a while for Germany and others to notice. They’ve even re-engineered things to let the gas flow backward to Poland et al from the western EU. And they’re building LNG terminals on a crash-priority basis.
Got URL? Yes, they do have sufficient LNG for now if they want to blow off next winter’s natural gas supplies. Norway is in the middle of finishing LNG liquefaction trains 5 and 6. 7 and 8 are due up next. All designed using our software!
Of course, LNG vaporization plants are a dime a dozen nowadays. The only trick to them is making sure that the vaporization burners do not use more than 2% of the natural gas product.
Back when I was in college, the university got quite a bit of bad press because they were taking more than 90 days to pay their bills. For some reason lots of people didn’t want to do business with the University. The professors in the Business School made sure we all understood that that kind of behavior was a really good way to ruin one’s reputation and business.
But earlier this month, I got a nice bill from our local hospital, for an ambulance ride that I took in January of 2013! Less than a week later I got a letter from a collection agency demanding payment. 🙁 When I went to the hospital to voice my displeasure, the woman I talked to said “Yeah, we know we’re slow. We’re understaffed. Sorry.” When I complained about the instantaneous referral to a collection agency, she said “That must have been a data entry error. We give you 30 days until we turn it over.” I explained that since they’d taken 15 months to send a bill I sure wasn’t going to be in a hurry to remit payment, she said it would be turned over to the collection agency after the standard 30 days, but that she could offer me a 55% discount for self paying. My use of words like ‘incompetence’ and ‘negligence’ seemed to go right over her head. Sigh.
I don’t remember an NDA covering the existence of the contract, only legitimate trade secrets. And, yah, the contract was pretty long and one-sided and had long and one-sided attachments. I disregarded pretty much the entire thing after they breached their side of it by not paying me as agreed.
Europe has sufficient LNG to produce electric power until this autumn.
I had dinner with a friend of mine in the “all bidness”, as we say down here. I mentioned that the Brits were looking into doing some fracking in the North Sea to get natural gas production increased and to export more to Europe. He said the infrastructure to do so is already in place. I also mentioned that China and Norway have been exploring it also. He was surprised that Norway was interested, as fracking is “not green” according to the enviros. Also, he mentioned that the spot price of natural gas in Japan is about 4x that of the US.
My use of words like ‘incompetence’ and ‘negligence’ seemed to go right over her head.
Obviously. The words contained more than two syllables.
Net 30 = 90+ days payment in my experience as a small manufacturer of custom electronics. And 90 days only happens after bugging the purchaser with E-mails and phone calls.
It is so much aggravation that I no longer take anything other than payment with order.
Good news is that most companies and even the US Government can pay via credit card / PayPal these days, at least for purchases of a few thousand dollars and less, and where the product is “commercial, off-the-shelf” or COTS as it’s known.
Also have run into the case where large aerospace companies sub-contract their small volume purchases to a 3rd party. Apparently they recognize that their own internal purchasing arrangements are so cumbersome and expensive that it’s cheaper to hire a 3rd party to run it. I’ve seen that for low end services, such as facilities maintenance and even copy center, it’s apparently expanded now to the point where 3rd party contractors running purchasing.
He was surprised that Norway was interested, as fracking is “not green” according to the enviros. Also, he mentioned that the spot price of natural gas in Japan is about 4x that of the US.
Norway will not be producing any oil in 2 or 3 years. Their huge reservoirs are transitioning to natural gas only. That is why Norway has built / is building eight LNG liquefaction trains and may build four more. Those LNG liquefaction trains are five billion dollars each and the price is rapidly rising since there are 10 trains being built world-wide right now. There may be twenty under construction worldwide in the very near future as the Australian LNG projects ramp up. The first is already going. The construction limits are the cryogenic heat exchangers (made by Linde in Germany) and the ships (South Korea is making one LNG ship per month, the new ships are bigger than aircraft carriers).
Yes, Japan has zero natural resources. In fact, the original LNG plant in Alaska (south of Anchorage) was scheduled for shutdown and has just been extended so that the USA can continue shipping LNG to Japan. That LNG plant has been running since 1969.
Japan shut down all of their 55 nuclear power plants three years ago in response to the Fukushima disaster. Those nuclear power plants provided over half of their electricity needs. They are actually talking about restarting the other nukes (and newer also with better safety features, I do not like BWRs) before this summer but it is extremely political.
Well it sounds like to me, with all this frantic running around looking for other energy sources, locating them, extracting and transporting them, etc., is like unto future pressing shortages. They’re like the Dutch boy at the dike, are they not?
“…The words contained more than two syllables.”
I was told in grad skool to avoid Latinate constructions like those and stick to good, solid short Germanic stuff. Also to ruthlessly cut, cut, cut, one’s text to the marrow, the minimum necessary to do the gig. But I like playing around with words, so fuck them.
What’s your beef against BWRs? I’d think that as an engineer you’d appreciate the elegance of the BWR versus the PWR. The only serious downside I can think of is that the scram rods in a PWR operate by gravity while those in a BWR operate against gravity.
I do not like the phase change of water to steam across the BWR fuel tubing. Part of the fuel rods stick above the water and give the wet steam about 50 F of superheat. Sounds great in practice but from a control viewpoint is lousy. Nukes do not like transitions. I think that PWRs are safer for the long term.
Well it sounds like to me, with all this frantic running around looking for other energy sources, locating them, extracting and transporting them, etc., is like unto future pressing shortages. They’re like the Dutch boy at the dike, are they not?
That is the nature of trade. Humans are traders by nature and energy in various forms happens to be a good thing to trade. Not all nations are blessed with natural resources and must trade stuff or labor to get them.
BTW, I believe that the North Sea sounds like a good place for fracking, just like the Gulf of Mexico. The North Sea is shallow, 200 to 300 ft deep, and probably has a lot more hydrocarbons under it. Yes, the infrastructure is there since they have pulled more than a billion barrels of oil out of there since the 1970s.
The entire world banking system fears the Fed. They’ll do exactly what the Fed tells them, and I mean that literally.
I don’t see it. The Fed just doesn’t have the power you think it does. The only thing they can do is refuse dollars to Russian banks. That threat worked against a little country like Switzerland, but it ain’t gonna work against Russia – they have too many ties to other countries, and I am quite sure that their banks could work through China or other countries. In fact, if the Fed tries this, it might just be the end of the dollar as the standard exchange currency – lots of countries are very tired of the US having this control, and would be happy to see the US fall on it’s face.
I mainly agree with brad on this topic; the hubris and arrogance of the Fed may well lead them to final destruction and it can’t happen soon enough; I will also be happy to see them, at least, fall on their faces, along with the regime that has been running the country into the toilet.
The North Sea wasn’t always there; in ancient times there was a land bridge from Britain across to Scandanavia and the continent. With a lot of back and forth of peoples, which they’re finding more evidence of lately.
The North Sea wasn’t always there; in ancient times there was a land bridge from Britain across to Scandanavia and the continent. With a lot of back and forth of peoples, which they’re finding more evidence of lately.
“Stone Spring: The Northland Trilogy by Stephen Baxter”
http://www.amazon.com/Stone-Spring-The-Northland-Trilogy/dp/045146446X/
They will write SF about anything nowadays.