So you tell all your suppliers to take a pay cut or fuck off
What happens if they all decide to fuck off?
Northgate Information Solutions (NIS) is sharpening up its axe act on procurement in a move that has gone down very badly with some suppliers. The IT giant has written to disties and vendors with a take it leave it offer - pay a nine per cent rebate based on volume of trade with NIS each year - the first instalment is …
And what happens if the customer tells NIS to fuck off?
Or is their finger so well-embedded in the public sector pie that that is never going to happen? When a company can be that cocky with its suppliers, it is clearly too certain of its future income.
I think you're right there. If one of my suppliers pulled this trick on their suppliers, I'd be on the blower telling them that I too wanted a rebate, backdated. I very much doubt the public sector will do that. Note of course that the public sector are under the cosh to pay all private sector suppliers in ridiculous 5 day terms. You can be sure that vermin like NIS will sit on the cash, not paying their suppliers for 120 days or more. And now the bastards want their suppliers to hand it back.
Companies like this deserve to fold, and I hope that NIS do. Gits.
I wouldn't cry too much for them. Many of the 'suppliers' concerned have names like 'Microsoft', 'Oracle', 'IBM', 'HP', 'VMWare' - basically a shooting gallery full of all the bastards you'd like to do this to, yourself.
In part, it has been prompted by a 'supplier' approaching Northgate and demanding license fees for software sold to the company in the late 1990s/early 2000s, and allegedly still in use. It's basically up to NIS to prove that the software isn't in use, and it is therefore not liable. (This supplier approaches NIS, and several other ex-customers, every few years, with this jolly little scam.)
No naming names, of course, because that would be naughty - and those affected will already know who I'm on about.
It's not rare to see this outside the IT industry. We have had several small-fry customers try it and laughed them out the door with a copy of the T&C they previously signed. The bigger players mostly had their line discounts quietly reduced - especially the discounts which were linked to spend targets they hadn't met...
Oh, then we cut the grace period on late payments to zero. Our next choice is charge interest on late payments and join a credit reference agency to share their payment history so their late payments affect their credit rating.
9% is more than twice the gross margin achieved by many large Distributors so quite frankly, unless vendors dip their hands deep into their pockets, it's a non-starter. This is just the half of it, cutting suppliers and pushing more business through will also meet issues on risk, more so given losses filed and with over 75% of total assets being intangibles.
Northgate can hardly be described as a giant, they just happen to have a big foot in local government IT where their customers are usually too stupid to know when they are being screwed. I remember when (in a previous incarnation as MDIS) they paid one of their suppliers in MDIS shares. Very useful for papering the wall.
Northgate has some business in the Public Sector, (notably every UK police force) but while these are large portfolios they lack the profits of the real money, which comes from private companies - many of them multinationals. That means Airlines, Insurance, Phamaceuticals, Motor Industry, the European arms of an Internet Search company whose name eludes me...
You may not realise this, because its offerings are often repackaged as those of its own clients (i.e. banks, mostly - think of business accounts that come with services bolted on). The outcome, however, is that Northgate is now directly responsible for managing the pay of 1 in 3 of the UK population (that definitely means some of you, reading this). So, it's a fairly big fish.
I've just penned a letter to Tescos and Morrisons, telling them to return 9% of everything I paid them in 2011. As an incentive, only the first to return a cheque will be retained as my preferred groceries partner.
Which reminds me - one of my clients wrote to all its suppliers last year, retrospectively changing their Ts&Cs, putting everyone on what was effectively 6-month terms. I wrote back, telling them to f**k off and pay up, which they duly did. Pretty much all their other suppliers did the same thing.
Well, its only what Tesco, Morrison, Asda/Walmart, Sainsbury, et al do to their suppliers. Its called an "overrider", and is actually what makes the profits that the supermarket reports to the Stock Exchange and the tax man.
They pay a ridiculously low price for the goods they buy all year, and muck the supplier around for quantities required etc; then they demand to be paid a bonus for being such a good customer!
Biting the hand that feeds IT © 1998–2019