Blog Archives - Stu Fleischer: The Common Cents CFO
Most people will ask the waiter in a restaurant to take back a meal if it is inedible or improperly cooked.  The same goes for the products or services purchased. If the goods or services do not meet promised standards or are not received on a timely basis, the company's financial department is perfectly within its right to challenge the billing.  Do not pay the billing until you are satisfied because you will lose much of your leverage once the vendor receives payment.

Remember, you are the customer and most vendors aim to please their customers.  They rely on repeat business and usually will be amenable to reasonable requests for a billing adjustment or substitute products or services.  Should a vendor's billing department not agree to an appropriate adjustment or substitution, do not be afraid to communicate your unhappiness with a top official at the vendor's company.  If that attempt fails, maintain your negotiating advantage by withholding payment of the bill.  Once the vendor's receivable from your company becomes sufficiently overdue, the pressure to settle the dispute will heighten.  Unless the billing and the dispute are extremely large, it will not pay for the vendor to begin a collection suit.

Whenever a company contracts with a vendor to perform a large construction assignment and agrees to pay installments on a percentage of completion basis, the financial officer should make sure that the percentage paid does not greatly exceed the work completed.  If there are delays in the work, the company should likewise postpone the contracted payments.  Should there be an unforeseen bankruptcy, at least the lost monies can be minimized.  Also, the greater the percentage that is owed the vendor, the greater the ability to ensure that the contracted work is completed on a timely basis.