D.F.

Krause

Read D.F.'s bio and previous columns

January 2, 2009

America’s Business Cash-Flow Slowdown: It’s All Gary’s Fault

If you own a business, or you deal in the financial end of a business, you’ve undoubtedly noticed something in recent months. No one is paying their bills on time.

I started to notice it in late September – right around the time the financial markets were getting ready to collapse. People who had always paid in 15 days or fewer were suddenly stretching out to 45 and 60 days. My cash-flow projections became about as good as a café on the moon.

“Look at all the money we’ll have in two weeks!” I would say.

Two weeks later: “Where’s all the money we’re supposed to have?”

So I started making collection calls to clients who had never, ever required such calls. They told me a familiar story, and I believe it. “We’re just waiting to get money in, D.F. It’s the darndest thing. I’ve never seen it like this before. No one is paying!”

Of course you realize what happens when you are accustomed to stuff being paid in 15 days, and it suddenly takes 45 to 60. It’s like you had no income at all for an entire month – because you didn’t! If you’re sitting on enough cash to get you through, it’s no problem for you, because you’ll get it all eventually. But if you’re not, then people will start making the same calls to you that you’re making to everyone else.

“D.F., where’s my money?”

“You’ll get it as soon as I get mine!”

“Oh, you too, eh?”

Well, this all got me thinking. You know when you’re on the freeway and the traffic is moving very slowly? You’re willing to speed things up, and probably so is the guy ahead of you, and probably so is the guy ahead of him. But up there somewhere, way ahead of you, is someone going slower than molasses, and everyone else is forced to follow suit.

I figure the current cash-flow slowdown affecting everyone in the business world works in much the same way. I would pay Bob, but I’m waiting for Larry to pay me, and Larry would be happy to pay me today, but he’s waiting for Albert, who’s waiting for Hogan, who’s waiting for Col. Klink. If we follow this chain far enough, we’re bound to find the person responsible. Somewhere, way up there at the front of the line, is the one guy who’s not paying his bills, and started all these slow-cash-flow dominos tumbling.

Determined to find this guy, I made a few phone calls. Then a few more. Then a few more.

This led me to a ramshackle office building in Austin, Texas, world headquarters of Gary’s Corporation. I walked in looking for a receptionist so I could ask to speak to Gary. But the shell of a reception desk had long since been abandoned. So I called out, “Hello! Gary?”

“Back here!” came a gruff voice just past the unplugged soda machine, four boxes and – for reasons about which I don’t dare speculate – a full-size inflatable doll.

“Gary, my name is D.F. Krause,” I said.

“You’re not a collector, are you?” he asked.

“Uh, no, I’m not, although . . .”

“IRS?” he wondered.

“No, you don’t owe me any money,” I said. “But apparently I’m in pretty select company. I traced the cash-flow slowdown currently afflicting the American business community all the way up the chain, and all roads lead to you, Gary. Every single trail of unpaid invoices in American business leads to you. You’re the holdup. So what’s the deal?”

“Well,” Gary said, “you think it’s easy paying for all this?”

I looked around at bare walls and an empty, unlit office.

“All what?” I asked.

“Sort of my point,” he explained. “I sort of stopped running the company a few years ago, but I forgot to cancel a bunch of service contracts I had ongoing. I didn’t even get my mail for months at a time. Then, when I finally did, there are all these invoices. Utility bills. Advertising invoices. Attorney retainers. It went on and on. And I’m thinking to myself, ‘Oh crap. Mental note: Next time you shut down a company, cancel all this nonsense.’”

“How much do you owe people?” I asked.

He showed me a spreadsheet. Fifteen minutes later, I came to.

“So nobody in business gets their bills paid on time until you pay all this?” I asked.

“That’s what they tell me,” he said. “Oh the heavy burdens we bear, eh, Mr. Krause?”

I wished Gary luck, got up and headed home, strangely accepting of the fact that I will presumably be issuing invoices for no apparent reason for the foreseeable future. It’s all because of the guy ahead of the traffic, causing the delays. You just knew it had to work like that, didn’t you?

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