We have been in lock down for 5 weeks today and the ripples in the economy are no longer ripples, but more like gentle waves right now. I have never spoken to so many nervous unsure people in my life before. These are people who have large businesses and are successful at what they do with years of experience. What chance do I have, but just hang in there and keep fighting as I don't ever give up as make no mistake this is going to be a battle of the fittest. We are only in round one and some businesses may not be out for round two.
We are a manufacturer so we are at the bottom of the pay ladder as we supply others who service others all forming a long chain of payments. This week I kissed one client goodbye as they were part of a group of three and the right time to consolidate was now. They are part of the French company La Poste so they are not small by any means. This one company closure unfortunately is painful as 1300 employees lose their jobs and in this climate no one will be hiring. We will still get paid which is a stroke of luck and will have to wait for July to see our rewards. Their account is 8 days overdue already, but beggars can't be choosers and just say thank you for standing by their obligations.
I haven't lost any business as it was all forwarded to it's sister company who I also service and they are also 8 days late with their accounting. I am starting to understand the problems that are now surfacing. Their clients who pay them are holding onto any cash resources and are delaying payments. With so much uncertainty it just makes for one big shit show as my client still expects deliveries yet they haven't paid yet. This is being replicated across the industry and you need to have your thinking cap on or become a statistic.
Everything we do to supply has a capital outlay from raw materials,labor, electricity and finally transport costs. None of these can not be paid for us to continue so our outlaying with deep pockets has to be carefully monitored. We as a company supply over 200 clients and it doesn't take much to create sweaty palms. My clients in Johannesburg are all late on their payments or have short paid this month. Lets just say we are working for free right now as profits are tied up in all the outstanding monies owing.
I am well connected in the industry and after a few chats have a good idea of who is safe and who is now borderline. Some of the borderline companies you would never think in a million years, but this lock down has taken it's toll already. Cash flows are non existent and without that a business slowly strangles itself. Day to day expenses such as diesel for trucks, packaging materials all have to be paid somehow and something has to give somewhere.
There is talk we are coming out of lock down on Monday, but only certain industries and then more the following week. What is making everyone nervous right now is we are expected to have another lock down next month and deal with this in chunk sized bites. They don't want hospitals to be over run and are staggering the inevitable. If that happens companies that are taking strain now could implode and fail to even be able to operate. We are not receiving payments like other countries and how long is a piece of string. If we are being owed millions already then so is everyone else and it is kind of feeling like a pyramid scheme right now. Someone will be shafted if you are not vigilant and talking to your clients.
A friend of mine supplies services to the airlines and they have not been paid anything. This company has been around for 20 years now and possibly can last another 4 weeks at most. The services they provide are costly to operate as they shuttle all the airline crews around collecting and dropping off as required. They also handle a portion of the cargo for South African Airways who have basically folded and payments may or may not happen. It is sad and depressing to see something someone else has built through dedication get obliterated with no recourse. I am just grateful for what I have and will protect it with everything in my power.
I have been open and honest with everyone I deal with and expect the same in return. I have told them to talk to me and keep me posted and I will do the same. I don't mind making nothing for the next three months or four months but then I expected to be paid in full at some point. I think of it like a savings account, but also having a bond with my customers working through this together. Whoever is still around in December will be stronger for it and much more established with all their clients.
