In the cartoon, the two guys are talking. One says: “I have a design problem.” The other guy says: “There are no problems – only challenges.” One such challenge in any consulting engineering business is cash flow.
All clients of consulting engineers know that, if they go to the supermarket, they have to pay at the till – they cannot leave without paying. The supermarket chains will only pay suppliers after about 90 days, so they are way ahead of the cash flow curve. If you take the car to a garage for a service or repairs, you will not get the car back until you have paid the invoice. Paying creditors monthly is also ahead on the cash flow curve. Hotels are ahead, but, apart from people who just vanish without paying, they are pretty much okay, since they have your credit card details and the law relating to fraud on their side.
Lawyers all ask a hefty deposit before proceeding. They will not let you out of hospital until you pay.
But engineering fees are not like that. You can invoice your clients and they just will not pay. The provincial governments and municipalities are an exception, as are some property development firms. But the rest are all the same.
Right now, we ask for a deposit of 50% before proceeding with the design work. Some clients, notably large State-owned organisations, refuse to pay this. At least one private client has refused to pay. This forces us to play games. When we finish a design, we send it off with ‘Draft’ and ‘Not For Construction’ written all over it, and we send an invoice. We have a guy who does nothing else but follows up on outstanding payments. He sends statements, phones up, tracks down and hauls the cash in – like dragging a dead horse through mud. But, to paraphrase Mr Micawber, monthly income paid on the 29th of the month so we can pay salaries – result: happiness. Monthly income paid on the first of next month so we have to borrow to pay salaries – result: misery.
The excuses that people offer for not paying are all, in a macabre sort of way, chillingly similar: “My partner has that in hand but he’s in Dubai/ New York/South Antarctic right now” and “Hazel has loaded that but she’s just stepped out” and “We only pay on the fifteenth of each month” and “Our mainframe is down” and “We’ll load it shortly”.
Consulting engineers earn money for only ten months of the year. For December and January, there is no income. This does not mean there is no work – it is just that others stop work mid-December and trickle back to work on about January 14 and the last thing they want to do is pay some small consulting practice an outstanding fee.
The banks are supposed to help by lending money in the form of bridging loans. This is a joke. Our bank will not lend us enough money to cover three months’ salaries but are more than willing to lend vast sums for projects that will never turn a profit. Even trying to speak to the bank is impossible. Whatever number you dial, you are put through to an automatic call centre that, when the phone is finally answered, gives you another number to call, which reconnects to the same call centre. Going to the branch in person is an exercise in futility. Finally, our branch has provided seating for waiting clients but has reduced the staff by two, so I wait and wait. The CEO of my bank proudly said that the bank was improving, since the staff were spending more time with clients. No, baba, the clients are waiting longer to be served. But, anyway, a New Year ahead. Pray it is not as bad as 2018.