NATE shared a letter Inside Towers received (see “Contractor Fears Going Under Due to Late Payment Issue”) from a small contractor detailing some of his issues, with some of its members from across the country; they agreed to share portions of their responses anonymously. Here are some of their statements about the late payment problem in general.
- “Extending payment terms to 90 days is tough enough, but in fact the carriers have increasingly found more and more ways to push the financing of their operations onto their vendors. The system is ripe to break right at a time when they need it to work at peak efficiency.”
- “In years past we have also been approached late in the third quarter or fourth to request we take on new construction or retrofit sites and delay billing until the following year. They act all cordial and reasonable in their approaching us with this request with the understanding that not all will agree. But then the last kicker is that if we did not agree to these terms we would not be sent bid requests from that point to the end of the year. In other words, take the offer to build without billing or lose the chance at bidding new sites at the end of the year altogether. I believe different regions use this tactic when they run out of capex budget but are still trying to meet their site-count goals.”
- “Across the board, the carriers are increasingly pushing off management responsibilities onto the contractors while ensuring costs are not added for the management (internally eliminating departments). With these added responsibilities and management comes a lot of liability, especially when we’re managing equipment. We’ve had scenarios in the past that we’ve been billed for the equipment that couldn’t be accounted for, and it’s not cheap.”
- “Delaying closeouts to extend terms is without question another tactic that’s being used; we currently don’t run into this too much in our area but is very easy to spot when we do. For a company that has no leverage and a small customer base this can be devastating.”
- “This situation reminds me of the lesson Walmart learned several years ago when they increasingly put price pressure on their suppliers driving them to or over the brink. The small vendors in particular couldn’t hold up to the pressure. Then along came Amazon. They LOVED the small suppliers and the small suppliers loved them. Now, Walmart has a definitive program for courting its suppliers, receiving feedback, and implementing change where change is warranted. They don’t have much of a choice with Amazon and other online retailers taking their market share. But I give them credit for doing it nonetheless. The telecom operators could take a lesson from the Walmart situation.”
- “In the case of the operators and the small telecom contractors, they have a skill set that is transferable to other industries. They can take those skills where they are better appreciated and can turn a profit. I would like to think the operators would be thinking strategically about not having contractors walk right when they need them most.”
August 3, 2018